August 18, 2006
Shareholders Respond to MBOs
In todays Wall Street Journal, an article by Jason Singer ("In Twist for Private Buyouts, Some Shareholders Fight Back"), Mr. Singer described the VNU NV buyout. Public shareholders demanded that the existing board pursue plans similar to those proposed by the private equity buyout firms for the benefit of the public shareholders rather than support a transfer of the firm to private hands. The demand increased the buyout price a bit. But the push back has been too long in coming. Why do hedge funds, in response to a private buyout, not buy stock and demand of a board to increase value for public shareholders by better operations as a public company, so as to take some of the private buyout groups profits for the public shareholders?? It is a strategy that should work in some of the more notorious buyouts in which management participates. Make the public managers work for the public shareholders or fire them and get some who will; do not let the public managers take the benefits of their information as private owners.
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