US MEGAMERGERS ON THE WANE When the management of Alamito corp
announced its decision to take the company private last autumn via a
leveraged buyout (LBO) at $125 a share, few could have anticipated the
bidding war that would ensue. At one point, remembered Daniel Good,
head of the mergers and acquisitions department at EF Hutton,
Alamito's investment bank, "we literally received a bid an
hour and in totoal there were 14 separate bids". Eventually, the
competition narrowed to four bidders and the victor was Osceola Energy
Inc, which agreed to pay $165 a share, a whopping premium over
management's original price.
An LBO bid from management often acts as a catalyst for higher
offers by outsiders, and Alamito, an electric utility with a stable cash
flow business, represented an attractive acquisition candidate. But the
number and intensity of bids for this particular corporate property,
Good believes, is a symptom of how...
