Agree.
WDC can't make a public offer before the end of the JDA, and/or after 4DS had make an announcement saying that they are sending metrics to potential bidders (the metrics themselves will never be known by shareholders), wich will mean that WDC will not be the only one in the know, so no insider trading.
But,
It seems difficult to believe that there are no negociations at the moment and that WDC is not testing some dyes of the second non-plateform lot, or making their own wafers based on the recipe they helped to write during the 2020 imec work (unless you think that the 2020 HGST input was for free - just a good friend trying to help - and doesn't give HGST any right on on the wafers produced at imec).
WDC certainly cannot annonce a takeover now, but they will have a very large advance on other potentiel bidders in knowing what the tech could do. They could even be producing a final an marketable product just now.
Once 4DS says that the datas had been released to potential bidders, WDC could make an offer long before other bidders because these other bidders will have to make their due dilligences wich could take a few weeks or months.
The competition seems definitly skewed in favor of WDC. Imo.
Also agree that an hostile takeover is not the most probable outcome.
But it is useful to keep it in mind because it defines the different parameters of the equation.
As everybody knows, corporate decisions are made inside a grid of legal constraints, competitors reactions and technical issues. You dont have to go all the way in one direction to know that you will meet some problems.
An hostile off market takeover is always an option for any bidder.
They happen every year in Australia (even if they not the most common form of takeover).
So, this possibility is part of the equation.
" So let's say WDC doesn't like the price and the technology goes to auction, it won't ONLY be WDC having a place at the auctioneers pulpit. Do you think Toshiba, Samsung, Intel, et al are going to just sit back and let it go for nothing? "
Precisely.
WDC will probably not like to see the technology auctionned behind closed doors.
That is why they could make a takeover offer and ask directly to shareholders if they want to sell, before any competitors has the time to make any due diligence.
It will be very difficult for shareholders to refuse a 300% premium in srip for scrip, even if the board said that better offers will come later.
Later could be very far away and if a competitor exists he could make another takeover offer. WDC will then have to put their offer as the same level if they want to succeed, or withdrow their offer when the time limit is reached.
So, imo, there are very few risks for any shareholder to agree to sell in an off market takeover.
- if there is a better offer, it will appear - either through a competing takeover offer or an announcement of the board saying that they received a letter from Apple saying they want to buy the technology at a better price (why not ?) - and the first takeover will not succeed.
Shareholders will have plenty of time to make up their mind (3 months minimum). And competitors will have plenty of time to show up.
WDC could even make an On market takeover and grab 25% of the shares in two or three days.
What would be the price a competitor will pay for 4DS after that ? Competitors will know that if WDC hold more than 25%, the majority holder will not be able to sell the technology to himself (75% of the votes needed).
WDC and 4DS know all that, so it will most probably not happen that way.
Imo, WDC is testing the technology at the moment. They will have soon a fair idea of it's value.
From this, they will be able to infer at what price the technology will go if there is an auction.
On that basis, they will make an offer to buy through an Off maket TO + scrip for scrip + scheme of arrangement. Clean, fair and simple.
Or, alternatively, if they think it is too expensive for them, they will just take the licence or buy 4DS through a consortium to share the burden of acquisition.
I think selling to a consortium, could be the best solution for everibody.
- There will be no ASIC complaint for lack of competition.
- WDC will still have a large advance on others to put a product on market.
- The technology will expand through many oulets and products, wich will grant a large and fast acceptation by the market.
- Shareholders will get a good price.
Of course, WDC could also decide that they are not interested ....
NO FINANCIAL ADVICE.
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