Affiliated Computer Services’ year of frenetic activity evolved into pretty much nothing. Last year, the IT services company turned down a buy-out approach, failed to reach an agreement with its founder to unwind his super-voting stake, had limited uptake for a huge share buy-back at $63 and lost two top executives to the options backdating scandal. Until Tuesday, the shares had fallen back to about $51. Will chairman Darwin Deason’s approach, alongside private equity group Cerberus, be enough to put it out of its misery? Probably.
But the price should have to rise from the current bid of $59.25 a share. For a start, the premium is an unstartling 15.5 per cent to Monday’s close. The offer comes in well below the mooted buy-out approach from last year and the more concrete buy-back offer at $63. The bidders will have left some room to sweeten the offer so that a special committee of ACS directors can “prove” its independence.
And there is always the chance a rival bidder will emerge, although Mr Deason’s massive voting position gives him an unhealthy level of influence.
In fact, maybe the most interesting area will be whether Mr Deason stands to gain financially from the fact that his economic interest of about 9 per cent gives him more than 40 per cent of the votes. Those super-voting shares arguably have a higher value than regular shares because they wield more power. After all, any deal has to secure his blessing. But if he is involved in buying the company himself, that becomes more murky.
If a deal can be hammered out, it might not be obvious from the headline price how much extra value he has obtained from his super-voting shares. But investors should, as far as possible, scrutinise his incentive structure in any buy-out vehicle. That could give a real sense of the true value assigned to his extra votes.