I doubt very much that the NEA board really "voted" to recommend...

First 21 Last

Share
Profile

Follow
timber1956

7,423 Posts.

152

12/09/22

20:27

Post #: 63657314
Share

Originally posted by timber1956: ↑

I doubt very much that the NEA board believes that the company is worth only $2.10 a share.

However, when a company with a stock trading at $1.50 receives a bid of $2.10, there is a certain amount of legal risk associated with rejecting the bid out of hand. The directors have a legal obligation to act in the "best interests" of the shareholders, and there is a risk that a court might judge that accepting a $0.60 premium is consistent with those best interests, and by rejecting the offer the directors may have failed in their feduciary duty.

From that perspective, their actions make sense.

On this occasion, I think that the board gets to have its cake and eat it too, because they know that their confidence in a much higher valuation is shared by the larger shareholders and that this proposal will almost certainly be voted down.

Expand

I doubt very much that the NEA board really "voted" to recommend the $2.10 offer...

It is more likely that the company's in house council, in consultation with the lawyers advising the insurance company that provides NEA directors insurance agreed that it would be the best idea for the board to endorse the offer, and that is not the sort of advice that a sane company director ignores.

NEA independent directors aren't paid that much...

NEA Price at posting: $2.08 Sentiment: Hold Disclosure: Held
1 Upvote

0 Great analysis

Reply