PDH - Premier Diversified Holdings Inc.

[Parsad]

The offer is identical!  Absolutely no difference.  1 share of Premier for 2.5 shares of Russell.

 

We had to do our purchase agreement first so that we could use an exemption from U.S. securities requirements...even though Russell is a Canadian company.  We could not proceed the other way.  Cheers!

 

The exchange rate was the same but the price premium was significantly different since the prices moved between the two transactions.

 

You can make the argument that RB is so illiquid that the price premium is irrelevant. I was skeptical of the premium in the original transaction, but you're right that being on the same terms as the public transaction counts in its favor.

 

The price premium is irrelevant...we didn't get any more than any other shareholder is going to get...since we did not buy or sell the shares and did not enjoy any of the spread that might have existed between the purchase agreement and tender offer. 

 

It's exactly the same offer and the result is exactly the same as any other shareholder.  Cheers! 

[LesPaul]

Bought some RB with the intention of soon owning PDH. I am surprised RB is still being traded at 0.065, but I guess that is the illiquidity & exchange impact others have referenced!

[ourkid8]

I did the same but I am adding to my position.  I assume we need to call our broker to execute this corporate action, correct? 

 

Bought some RB with the intention of soon owning PDH. I am surprised RB is still being traded at 0.065, but I guess that is the illiquidity & exchange impact others have referenced!

[OracleofCarolina]

Russell issued a press release. Guess they are just playing hardball but are urging shareholders to reject the tender offer.

[bizaro86]

Russell issued a press release. Guess they are just playing hardball but are urging shareholders to reject the tender offer.

 

Their press release looks like more than "just playing hardball" to me, especially with the 33% committing to not tender. Nonetheless, that should leave enough room in the tender for me to get 100% allocated on the position I bought specifically to tender.

[LesPaul]

Bought more RB. Although I am not a member of the small cap forum, saw some negative feedback on twitter searching $rb.v

 

I did the same but I am adding to my position.  I assume we need to call our broker to execute this corporate action, correct? 

 

Bought some RB with the intention of soon owning PDH. I am surprised RB is still being traded at 0.065, but I guess that is the illiquidity & exchange impact others have referenced!

 

I usually receive a call and mail from RBC in a fairly prompt fashion with instructions and offer details.

[Zorrofan]

Bought more RB. Although I am not a member of the small cap forum, saw some negative feedback on twitter searching $rb.v

 

I did the same but I am adding to my position.  I assume we need to call our broker to execute this corporate action, correct? 

 

Bought some RB with the intention of soon owning PDH. I am surprised RB is still being traded at 0.065, but I guess that is the illiquidity & exchange impact others have referenced!

 

I usually receive a call and mail from RBC in a fairly prompt fashion with instructions and offer details.

 

Here is the press release....

 

http://www.russellbeer.com/pri.asp?pressID=432

 

cheers

Zorro

[jimjam]

COBF newbie here trying to make sense of PDH.

 

Parsad wrote positively about Russell so I would have expected a friendly tender, but reading through the "Background to the partial offer" on pp. 8-11 of Russell's Directors' Circular (10 July 2015 filing on SEDAR), it appears that the communication broke down:

 

  http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00016831

 

If PDH intends an unfriendly offer, how exactly do they intend to add value? (I know Biglari rubs many people the wrong way, but, when he makes an offer, he does deliver a clear list of problems and suggestions.)

 

To this end, I've been trying to find out more about Parsad's track record... I saw that Parsad lists himself as having been "profiled" in Guy Spiers’ “The Education of a Value Investor”:

 

  http://premierdiagnostics.ca/corporate/management-team/

 

But this turned out to be fruitless: when I did a search through the Kindle edition, there is no profile, only Parsad's name in a long list of acknowledgements.

 

So:

 

1. Where can I read more about Parsad's philosophy and performance?

 

2. Are MPIC's letters available to read?

 

3. What were major investments made by MPIC?

 

4. Has MPIC taken control positions before?

 

5. Is PDH intending to put new management in place at RB?

 

Would be grateful for any insights.

 

-jimjam

[CONeal]

I think the offer was pretty friendly.  As it was a 30+%increase to the share price.  Keep in mind that the main issue the RB management seems to have is that the offer is not cash and for the entire company.  RB has made a few moves since the tender in order to straighten out their funding and start expansion.  Were they planning to do this before the offer? 

 

Anytime someone tries to take control of a company, management is going to cry foul bc their way of life might change. 

 

The MPIC is available to accredited investors.  It kinda sucks about not having the letter available to the public but you can get a real deep understanding of his philosophy and principals by going through his posts in the past on this board.

 

I was waiting several years for him to have a public vehicle based on keeping track of him on here.  From my view, he is fair but will not let people strong arm him if they are trying to screw him.  He has a lot of the same principals that I have has far as how management should work for the shareholders and not fleece them to get a leg up in life.  Plus, he is smarter then me so it was a know brainer for me to buy in.   

 

Hope this helps a little.

[Uccmal]

I think the offer was pretty friendly.  As it was a 30+%increase to the share price.  Keep in mind that the main issue the RB management seems to have is that the offer is not cash and for the entire company.  RB has made a few moves since the tender in order to straighten out their funding and start expansion.  Were they planning to do this before the offer? 

 

Anytime someone tries to take control of a company, management is going to cry foul bc their way of life might change. 

 

The MPIC is available to accredited investors.  It kinda sucks about not having the letter available to the public but you can get a real deep understanding of his philosophy and principals by going through his posts in the past on this board.

 

I was waiting several years for him to have a public vehicle based on keeping track of him on here.  From my view, he is fair but will not let people strong arm him if they are trying to screw him.  He has a lot of the same principals that I have has far as how management should work for the shareholders and not fleece them to get a leg up in life.  Plus, he is smarter then me so it was a know brainer for me to buy in.   

 

Hope this helps a little.

 

Ditto that.

 

Jimjam, Sanjeev has 7680 posts on this board.  He started the first board 12 years ago - I have known him, personally, for ten yrs.  That should give you some flavour, if you live long enough to read through all the posts.  Like CONeal I bought a large chunk of shares (10% of my holdings) in PDHs private IPO.  It certainly wasn't based on the business.  It was based wholly on the operator. 

 

Of course RB is crying foul as per COMeals comments. 

[abitofvalue]

Agreement with Russell reached.

 

- Premier withdrawing bid for 51% of shares

- Premier ownership to be limited to 19.9%

- Sanjeev and Alnesh to join Russell's BoD

 

So looks like the original transaction will go through but the public takeover offer wont.  Interesting developments.

[ourkid8]

I was hoping to pick-up Premier shares for $0.1625 /share...  :-(  Is everyone going to sell their shares or allow Sanjeev and team to create value? 

 

Agreement with Russell reached.

 

- Premier withdrawing bid for 51% of shares

- Premier ownership to be limited to 19.9%

- Sanjeev and Alnesh to join Russell's BoD

 

So looks like the original transaction will go through but the public takeover offer wont.  Interesting developments.

[bizaro86]

That's certainly disappointing from my perspective, as I purchased RB specifically to trade into PDH shares.  It looks like the business is trading at a cheap price (and presumably Parsad thinks so as well). On the other hand, pulling the bid may pull the floor out from under the stock, at least temporarily.

 

From a PDH perspective, this is unfortunate, as any time they can convert high valued stock into low valued assets it is very accretive.

[Parsad]

Hi Everyone,

 

Just wanted to thank you for any support you showed or planned on showing for the tender!  I cannot discuss things too much, but I wanted to give a bit of clarity on how things transpired.

 

We had to conduct the private sale between MPIC Fund I, LP and Andrew first, because of archaic U.S. regulations and exemptions that would have limited us from conducting the transaction after the tender.  Even though Russell is a Canadian security, U.S. securities law came into effect due to MPIC Fund I, LP's ownership.

 

We also had every intention of completing the tender at the same conversion, but the chances of us defeating the cease trade order and having the shareholder rights plan removed were low based on Canadian securities case history.  This was also not going to be a cheap endeavour for Russell shareholders and management was going to war...probably would have dragged out well past this year's AGM in terms of things being stuck in court.  They had less than half a million in cash, and they would have burned well through that if we pushed it.

 

While we certainly would have liked to increase our ownership of Russell, we decided that the long-term goal of increasing shareholder value for everyone by being on the board and facilitating that any way we can, was the better alternative than destroying shareholder capital in a lengthy proxy.  This also forces Russell's existing management to prove their value over the next 16 months.

 

Once again, thanks for your support and we will do everything we can to increase shareholder value at Russell and Premier!  Cheers! 

[OracleofCarolina]

Thanks for the comments Sanjeev!

Glad we avoided a costly proxy battle.

[Libs]

Thanks for the comments Sanjeev!

Glad we avoided a costly proxy battle.

 

+1

[benchmark]

Thanks for the comments Sanjeev!

Glad we avoided a costly proxy battle.

 

+1

 

Good that we avoided a proxy battle, but could this have been handled better?

[bizaro86]

Thanks for the comments Sanjeev!

Glad we avoided a costly proxy battle.

 

+1

 

Good that we avoided a proxy battle, but could this have been handled better?

 

Just curious, as there have been a few comments that it's "good to have avoided a proxy batte." Not specifically to this case, but is there a reason people believe that?

 

It seems to me a proxy battle isn't something to be avoided particularly. It has costs which need to be weighed against the value of success, but in many cases (PDH buying an undervalued business with stock, or activists getting on the board at Solitron) it seems like the benefits may outweigh those costs.

 

Or are the comments specific to PDH, in that people think making the company a BRK-like "safe home" for businesses will have more long term value than making hostile acquisitions, even if they are very accretive?

[benchmark]

Thanks for the comments Sanjeev!

Glad we avoided a costly proxy battle.

 

+1

 

Good that we avoided a proxy battle, but could this have been handled better?

 

Just curious, as there have been a few comments that it's "good to have avoided a proxy batte." Not specifically to this case, but is there a reason people believe that?

 

It seems to me a proxy battle isn't something to be avoided particularly. It has costs which need to be weighed against the value of success, but in many cases (PDH buying an undervalued business with stock, or activists getting on the board at Solitron) it seems like the benefits may outweigh those costs.

 

Or are the comments specific to PDH, in that people think making the company a BRK-like "safe home" for businesses will have more long term value than making hostile acquisitions, even if they are very accretive?

 

My understanding is that Russell only has limited cash, and management is willing to go to war -- i.e., burning through all cash and more to fight the buyout. Even if PDH eventually wins, the asset becomes less appealing.

[abitofvalue]

FYI - Updated filings through June 30 filed with SEDAR today.

 

Looks like the stock has sold off to 0.1294 over the last month (post-Russell).  Seems the optics of the deal scared off some holders. Hopefully lessons learned by management.

 

Anyone else have trouble getting executions on this name? I have put in buy orders above the quoted price a couple of times and had no fills. Probably a function of my using a crappy broker (Merrill) but thought I would check..

[Parsad]

 

Looks like the stock has sold off to 0.1294 over the last month (post-Russell).  Seems the optics of the deal scared off some holders. Hopefully lessons learned by management.

 

 

Ah, what "optics" and what "lessons"?  Stock price will fluctuate on supply/demand and how markets value the company.  We have no control over that, nor is there any lesson to be learned.  Your orders are not being filled because the sellers are not willing to sell below a certain price.  The quote is irrelevant...orders are filled based on the ask.

 

As for the Russell deal, there was nothing fuzzy about the "optics".  It was about as clear as we could make it without meeting each shareholder and talking to them for an hour!  The tender price if completed would have been very good for Premier shareholders, and the price was by far the best offer Russell had.  We're not going to blow a wad of shareholder capital to win a war that destroys the underlying asset or it's intrinsic value.  What would we gain from that? 

 

Our egos never get in the way of doing the right thing.  Cheers!

[Crip1]

FYI - Updated filings through June 30 filed with SEDAR today.

 

Looks like the stock has sold off to 0.1294 over the last month (post-Russell).  Seems the optics of the deal scared off some holders. Hopefully lessons learned by management.

 

Anyone else have trouble getting executions on this name? I have put in buy orders above the quoted price a couple of times and had no fills. Probably a function of my using a crappy broker (Merrill) but thought I would check..

 

 

It looks like roughly 100K Shares (Less than C$20,000) have changed hands over the past three weeks. Not finding sellers to fill buy orders would suggest, at least to a unsophisticated individual like me, that those who own this are not looking to sell at anything close to the most recent trade. I would be one of those owners.

 

 

-Crip

 

 

[abitofvalue]

 

Looks like the stock has sold off to 0.1294 over the last month (post-Russell).  Seems the optics of the deal scared off some holders. Hopefully lessons learned by management.

 

 

Ah, what "optics" and what "lessons"?  Stock price will fluctuate on supply/demand and how markets value the company.  We have no control over that, nor is there any lesson to be learned.  Your orders are not being filled because the sellers are not willing to sell below a certain price.  The quote is irrelevant...orders are filled based on the ask.

 

As for the Russell deal, there was nothing fuzzy about the "optics".  It was about as clear as we could make it without meeting each shareholder and talking to them for an hour!  The tender price if completed would have been very good for Premier shareholders, and the price was by far the best offer Russell had.  We're not going to blow a wad of shareholder capital to win a war that destroys the underlying asset or it's intrinsic value.  What would we gain from that? 

 

Our egos never get in the way of doing the right thing.  Cheers!

 

 

Optics - Like 5 posts above our posts is an explanation from you about the deal. Hard to see why that would be needed if everything was super clear and there were no optical issues..

 

Again to be clear - I don't think there was any actual unfair dealing. I do think there was the appearance of potential issues that you explained satisfactorily. Heck, I am looking to buy more reflecting my trust in your stewardship of investor capital.  I was just conjecturing as to why the stock price had been drifting so much lower when I referred to optical issues scaring off some holders but you are right it could have been anything.

 

Regarding lessons - How far management will go to keep their position entrenched.  Also would have thought going through the tender acquisition process would have been somewhat educational in itself, but maybe you already knew all there was to know about a hostile tender offer to take over a public company.. I suspect based on some of your other posts, your investment hero's and reputation on this board that you actually learned lessons from the process.     

 

Either way I phrased it poorly - Apologies if it came across the wrong way.  Didn't mean to imply you did something shady here mate.

 

[Parsad]

 

Looks like the stock has sold off to 0.1294 over the last month (post-Russell).  Seems the optics of the deal scared off some holders. Hopefully lessons learned by management.

 

 

Ah, what "optics" and what "lessons"?  Stock price will fluctuate on supply/demand and how markets value the company.  We have no control over that, nor is there any lesson to be learned.  Your orders are not being filled because the sellers are not willing to sell below a certain price.  The quote is irrelevant...orders are filled based on the ask.

 

As for the Russell deal, there was nothing fuzzy about the "optics".  It was about as clear as we could make it without meeting each shareholder and talking to them for an hour!  The tender price if completed would have been very good for Premier shareholders, and the price was by far the best offer Russell had.  We're not going to blow a wad of shareholder capital to win a war that destroys the underlying asset or it's intrinsic value.  What would we gain from that? 

 

Our egos never get in the way of doing the right thing.  Cheers!

 

 

Optics - Like 5 posts above our posts is an explanation from you about the deal. Hard to see why that would be needed if everything was super clear and there were no optical issues..

 

Again to be clear - I don't think there was any actual unfair dealing. I do think there was the appearance of potential issues that you explained satisfactorily. Heck, I am looking to buy more reflecting my trust in your stewardship of investor capital.  I was just conjecturing as to why the stock price had been drifting so much lower when I referred to optical issues scaring off some holders but you are right it could have been anything.

 

Regarding lessons - How far management will go to keep their position entrenched.  Also would have thought going through the tender acquisition process would have been somewhat educational in itself, but maybe you already knew all there was to know about a hostile tender offer to take over a public company.. I suspect based on some of your other posts, your investment hero's and reputation on this board that you actually learned lessons from the process.     

 

Either way I phrased it poorly - Apologies if it came across the wrong way.  Didn't mean to imply you did something shady here mate.

 

No worries!  There's only so much we can put into filings, financial notes, MD&A's, before thinking it's overkill.  So what I can clarify, I try to, thus the post. 

 

One thing I will say, and this isn't a reflection on you, but really all investors including myself in the past...there is so much that armchair quarterbacks do not know about the underpinnings of the day to day operations of any business, acquisition, etc.  Even many boards have no clue about all of the company's inner workings unless they are directly involved with management on a weekly basis. 

 

When Buffett says he's a better investor because he's a businessman, and a better businessman because he's an investor, it is absolutely true.  A lot of times, shareholders formulate theories from bits and pieces of information or conjecture, when there is much more going on that it is at times indescribable in a couple of paragraphs in a press release or even a page of the MD&A. 

 

It would literally take an hour of sitting down and talking to you to explain everything that happened during the tender process...many regulations, securities laws and even actions that are absurd, but we had to deal with.  And then play out the various scenarios under that environment, and their various outcomes, to come to the best possible risk/reward result for shareholders.  Far more detailed and complex than simply running a discount cash flow statement and buying with a margin of safety.  Cheers!

[rkbabang]

 

One thing I will say, and this isn't a reflection on you, but really all investors including myself in the past...there is so much that armchair quarterbacks do not know about the underpinnings of the day to day operations of any business, acquisition, etc.  Even many boards have no clue about all of the company's inner workings unless they are directly involved with management on a weekly basis. 

 

When Buffett says he's a better investor because he's a businessman, and a better businessman because he's an investor, it is absolutely true.  A lot of times, shareholders formulate theories from bits and pieces of information or conjecture, when there is much more going on that it is at times indescribable in a couple of paragraphs in a press release or even a page of the MD&A. 

 

It would literally take an hour of sitting down and talking to you to explain everything that happened during the tender process...many regulations, securities laws and even actions that are absurd, but we had to deal with.  And then play out the various scenarios under that environment, and their various outcomes, to come to the best possible risk/reward result for shareholders.  Far more detailed and complex than simply running a discount cash flow statement and buying with a margin of safety.  Cheers!

 

Exactly,  no outside shareholder of any company really knows what is going on everyday at the companies he is investing in. Creating theories and using conjecture based on bits and pieces is all anyone can ever really do.  And if this is true with a small company, can you imagine how much more true it is with a large cap?    I invest in Apple and have all kinds of theories about what their strategy is or what is going on, but even the best informed outside shareholder can't possibly know 1% of what is really going on day to day.  Every topic on this board is filled with people throwing out their theories, the PDH thread will be no different.  It will only be different for you, because you actually do have an understanding of what is going on day to day.  I'd imagine that Tim Cook could have a thing or two to say about all the armchair quarterbacking on the Apple board too if he read it.