Sea Accepts PGA Buyout, What Does it Mean for Fabulous? — Dark Blue

Photon Group to acquire Dark Blue Sea.

Does a nickel make all the difference in the world?

Dark Blue Sea has accepted (pdf) Photon Group’s takeover bid following Photon upped its offer from 30 cents per share to 35 cents per share. In a joint statement, Dark Blue Sea Chairman Vernon Wills stated “We are pleased with the increased offer. It is in the best interests of DBS that this transaction is concluded as promptly and efficiently as possible.”

Let’s rewind a little bit and see what Wills and the board at Dark Blue Sea, parent firm of Fabulous, had to say regarding Photon Group when it wanted to insert two of its own onto DBS’ board (something it will do following the takeover).

Photon may potentially change the strategy of Dark Blue sea in a way that will benefit Photon shareholders and not all Dark Blue Sea shareholders…The Directors of Dark Blue Sea believe that Photon is looking at Dark Blue Sea as an opportunity to reduce their debt be either selling the firm, introducing significant debt onto Dark Blue Sea’s balance sheet by buying one or more of Photon’s businesses, or starting aggressive business activities to boost short term profitability at the expense of longer term shareholder value”.

That was ahead of Photon’s 30 cent offer, and also ahead of the 35 cent offer.

Is the offer of 35 cents per share enough to change DBS’ mind that Photon is looking at the opportunity as a way to reduce its debt or over-leverage DBS? Or does it just mean that at 35 cents, the board is willing to jump ship and feel lucky to walk away with what it got?

Or maybe it was just shrewd negotiation. But it’s a fair question to ask if you’re a Fabulous client.