Before we dive into a new deal that was announced last week, I wanted to mention that the acquisition of TaskUs (TASK) by the co-founders of the company along with Blackstone fell apart last week in the face of shareholder opposition.
We added TaskUs to the model portfolio at the start of this month on expectations of a higher offer after minority shareholders objected to the low acquisition price. We have seen this play out successfully in numerous other mergers but that was not the case here.
We concluded the following about the TaskUs deal in the October special situations newsletter-:
Minority shareholders that bid up the target’s stock price in order to secure a higher deal price are not always successful, as we saw with the take-private of Endeavor by the PE firm Silver Lake earlier this year. The deal closed at the original price, since the company’s co-founders, management team, and Silver Lake held all the voting power.
However in this case, minority shareholders still have a voice, and the size of the company is not so small that shareholder indifference might pose to be an issue. In some microcap deals where the stock is trading near penny stock territory, shareholders simply don’t vote for or against the deal since they have long moved on from paying any attention to the company.