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"ChaPaVe Partners" is the name, but what's its game?
This morning, this previously unheard of firm announced a "tactical tender offer" for 1.5 million shares of Travelzoo (Nasdaq: TZOO ) . The news sent the shares rocking 9% higher in pre-market trading, but professional market watchers expressed skepticism. Commenting on the $40-per-share offer, The Benchmark Co.responded "Are you kidding me? ... We have never head of ChaPaVe Partners and ... this offer may be bogus."
That's a curious comment from an analyst that recommends buying Travelzoo stock up to $60 -- but I think Benchmark is on the mark. As the analyst points out, Travelzoo's supposed acquirer only created a company website two weeks ago. Prior to that, ChaPaVe was apparently a nonentity. More importantly, its "offer" may not be much of an offer at all.
According to the terms of its press release, ChaPaVe "plans to commence" its tender offer "subject to certain conditions." Right off the bat, this tells us the offer isn't in effect yet. As for the conditions, they're vague:
- "We encourage all 150 institutional investor shareholders to add to their holdings in order to reduce the number of shareholders as part of our tactical strategy." (So what happens if all 150 institutional shareholders don't play ball?)
- "ChaPaVe will meet with Travelzoo's management and board of directors in order to complete due diligence." (Travelzoo's response: "We have not had any contact with this company and cannot comment.")
- "Another condition is that ChaPaVe obtains a financing commitment no later than October 18th, 2011, subject to possible extension." (And if it doesn't, the firm would have no commitment to buy anything, much less pay $6 more than Travelzoo's current share price.)
- "ChaPaVe may choose not to move ahead ..."
ChaPeVe's supposed offer isn't quite as shareholder-unfriendly as the "mini-tenders" that Canada's TRC Capital has run in the past, trying to buy shares of name-brand firms like Pfizer (NYSE: PFE ) , Abbott Labs (NYSE: ABT ) , and General Electric (NYSE: GE ) on the cheap. To the contrary, ChaPeVe seems to be making a tactical feint at a takeover, in hopes of boosting the value of shares it already owns (incidentally benefiting other shareholders in the process). If you're a Travelzoo shareholder, you might want to send the folks at ChaPaVe a thank-you note (assuming they've had time to rent a P.O. Box yet).
Just don't expect anything to come of their "offer."
What's the next step in this alleged attempt to buy Travelzoo? Add the stock to your Fool watchlist, and find out.