Capital markets are proxy-fight friendly: Part II
With both Microsoft and Blockbuster exhibiting extreme patience with their acquisitions attempts, it’s worth looking at the root cause.
Namely, it’s the lack of other possible buyers. The turmoil in credit markets has stripped much of the power away from private equity firms, who have dominated the M&A landscape for much the last three years.
Meanwhile, lean-pocketed strategic buyers have little desire to increase their leveraged capital base.
This leaves few buyers in the marketplace, allowing those on the prowl to be extremely patient. Whereas Yahoo would have likely found several buyers or partners in times past, barely anyone will dance with her now.
And consider Circuit City. Would you risk your credit rating in this market by taking on this troubled operator? No, and Blockbuster knows it, allowing it to patienly await Circuit City’s response.
All this creates a tremendous opportunity for these would-be buyers to take their case directly to shareholders, a timely and open process that in the past would have only allowed another buyer more time to come into the picture.
But that buyer is not coming. And we shall have a fun proxy season.
