Although Letterone - the fund controlled by the Russian tycoon Mikhail Fridman who owns 29% of Dia-won at the shareholders' meeting on Wednesday, the truth is that the victory was not as strong as he would have liked. It was more a triumph by default, given that the scarce quorum of 54.3% - the lowest in the history of Dia as listed - served him on a plate the defeat of the council.
The hedge funds that entered the company in the heat of the takeover and the more than 40,000 small investors of Dia have begun to exert pressure for the Russian tycoon to increase its offer. It needs owners with a minimum of 35.5% of the capital to accept their offer. And it only has one shot to achieve it. At the meeting several individuals complained bitterly of the price they consider of demolition. And a not insignificant part of the shareholders voted the death of the company, not supporting neither the expansion proposed by the council nor that of Fridman.
It is the prisoner's dilemma. Shareholders are gamble receiving 0.67 euros per share, when it reached a maximum of more than 7 euros in April 2015, or lose it all. Fridman may have to decide between raising the offer or being shipwrecked in his war for control of the group. It already suffers some latent losses of almost 700 million after having bought at an average of 4.3 euros per share.
Increase the offer 0.1 euros per title would mean for Fridman an additional investment of 22 million if owners come 35.5%. In the almost impossible case that owners of 71% of Dia went to the offer, the investment would rise by 44.2 million: the maximum total cost for Letterone would be 340 million. And the fund of the Russian investor will have an ace up his sleeve: the regulation on opas allows him to know almost in real time the acceptance. "The entities that act on behalf of the offeror will communicate daily the acceptance statements received (...) to the offeror", explains the royal decree.
Letterone can also improve the OPA "at any time prior to the last five calendar days foreseen for acceptance". If the acceptance is poor, the price will rise before its completion, say financial sources.
Dia's shareholder profile has changed radically. Between February 5, when the OPA was announced, and on the 11th of that month, 109 million shares of Dia changed hands, 17% of the total. Between those two dates, Day quoted above 0.67 euros. The funds that came in then have no incentive to sell their securities to the Russian investor at a loss.
Fridman needs broad support from Dia's shareholders in his takeover. To avoid launching the offer at the lowest price paid in the last 12 months -3,73 euros in October-, Fridman accepted Article 8 letter efe of the Opas rule, which requires that the offer has an acceptance of, at less, 50% of capital not controlled by the offeror. That is, 35.5% of the total, leading Fridman to control at least 64.5% of society.
The exact percentage of the capital that supported Fridman's postulates at the meeting is still unknown (the company has until Monday to communicate it), but not even in the impossible case, in practice, that all the attendees - with a 25 , 3% of the capital- you sell the shares will make your bid triumph. You will need to convince the hedge funds.
The pressures of these already began with their absence on the board and will continue for the next few weeks.
While the CNMV He has not yet approved the OPA. He admitted it for processing on March 8. Since then, the supervisor has 20 working days to give the brochure the green light, although the term is restarted whenever it requires a paper to Letterone. However, sources familiar with the progress of the probation affirm that it is foreseeable that it will be ready in mid-April.
Once the CNMV gives the yes to the takeover, there will be between 15 and 70 days of acceptance, although the managing partner of the Letterone retail division, Stephan DuCharme, has explained to analysts and funds that it will be the shortest time for can execute on time the remedy for negative equity. In principle, a participative loan that will be transformed into capital when the expansion committed by Fridman of 500 million is executed if the investor reaches an agreement with the bank.
The support of the funds is essential, since Fridman was able to see on the board the rejection of the retailers to his plan.
Dia's creditor bank - specifically, the G4 formed by Santander, BBVA, Barclays and Société Générale - will meet next week for the first time with Letterone after the group's first shareholder won the meeting on Wednesday. The group of 12 entities held a meeting on Wednesday. They agreed to restart negotiations with the aim of achieving a agreement before April 30, as published yesterday CincoDias. The main obstacle is the repayment of 247 million of the 912 of bank debt that Letterone rejects.