OpenTV Terug naar discussie overzicht

OPEN LETTER TO OPEN TV STOCKHOLDERS

1. [verwijderd] 29 oktober 2009 23:06

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   October 26, 2009
   
   Dear Fellow OpenTV Shareholders,
   
   Arcadia Capital Advisors, LLC, through its affiliated funds (Arcadia” or we”), is the beneficial owner of Class A ordinary shares of OpenTV Corp. (OpenTV”, or the Company”). Upon extensive due diligence, conversations with management, and an in-depth analysis, Arcadia urges you to reject the $1.55 per share Tender Offer (Tender Offer” or Second Offer”) by Kudelski, S.A. (Kudelski”) for OpenTV’s Class A ordinary shares announced on October 5, 2009.
   
   We believe the Tender Offer fails to properly reflect the value of the OpenTV asset and shareholders should demand a higher price for the following reasons:
   
   
   1. Intrinsic value of OpenTV shares is substantially higher,
   2. Kudelski offer doesn’t account for synergies and foreign exchange benefits,
   3. Kudelski has an overly negative view of OpenTV’s business,
   4. Timing of the Tender Offer is unusual and leads to information asymmetry,
   5. Kudelski faces a significant hurdle in a minority squeeze out and delisting strategy,
   6. Tender Offer financing provides insights into Kudelski’s ultimate plans.
   
   
   
   
   OPEN LETTER TO OPEN TV STOCKHOLDERS
   PAGE 2
   
   
   While we believe an acquisition of OpenTV by Kudelski would be beneficial to all parties involved, any transaction must fully reflect the underlying value of OpenTV's business. In our opinion, shareholders have a lot to gain by rejecting the current offer.
   
   1) Intrinsic Value of OpenTV Shares is Substantially Higher
   The current offer significantly undervalues the fair value of OpenTV Class A shares. A $1.55 per share offer values the Company at a multiple of enterprise value (EV”) to last twelve months (LTM”) EBITDA 1 of 7.5x. A much higher purchase price multiple of LTM EBITDA would be more appropriate.
   
   We believe a substantially higher price is appropriate based on the following observations:
   
   
   • The Special Committee of OpenTV’s Independent Board Members (the Special Committee”) indicated that the acquisition price should be at or above $2.00 per share,”
   • NDS Group, a close comparable to OpenTV, was acquired by Permira Advisors, at a 13x EV/LTM EBITDA multiple,
   • Kudelski’s own stock is currently trading at a similar 13x EV/LTM EBITDA multiple, and
   • Kudelski’s offer price premium analysis is not relevant given the significant improvement in equity market conditions since February 26, 2009.
   
   (1) EBITDA represents earnings before interest, taxes, depreciation and amortization and is a proxy for Non-GAAP cash operating earnings.
   
   
   After spending three months fully assessing Kudelski’s $1.35 per share offer from February 26, 2009 (the First Offer”), the Special Committee, led by Eric J. Tveter, with the help of its independent financial advisor, UBS, concluded on April 16, 2009 that Kudelski’s offer implied a valuation that was well below the corresponding EBITDA multiples for selected publicly traded technology companies and selected technology companies which had been involved in business combination transactions.” On May 6, 2009 Mr. Tveter stated to Kudelski that an appropriate price should be at or above $2.00.” Kudelski rejected this view and withdrew their First Offer on June 4, 2009. We can only wonder if Mr. Tveter’s views of intrinsic value led to his ultimate departure from the Kudelski controlled board on October 7, 2009.
   
   Permira Advisors Ltd., a European private equity firm, purchased a 51% stake in NDS Group (NDS”) on February 5, 2009 as part of a take private transaction valued at 13x LTM EBITDA. In addition to being OpenTV’s and Kudelski’s primary competitor, NDS had a similar Class A and Class B share structure. It is our belief that, as part of this transaction, NDS’ Board, shareholders and financial advisors ensured that the minority shareholders received fair value in the going private transaction.
   
   Kudelski’s own stock currently trades on the Swiss Exchange at a price which implies a valuation of 13x EV/LTM EBITDA. As OpenTV is a subsidiary of Kudelski, the two companies have overlapping customers and comparative operating characteristics. Based on these similarities, we believe that any offer for OpenTV should properly reflect Kudelski’s publicly traded valuation. We think that OpenTV’s minority shareholders should not allow Kudelski to arbitrage their stock, buying OpenTV at an enormous discount to what it would be valued once it is fully owned by Kudelski. Furthermore, Kudelski paid $3.60/share in 2007 to acquire a controlling position from Liberty Media based on the strategic nature of the OpenTV asset. Why should shareholders allow Kudelski to complete the acquisition at less than half the price paid a little over two years ago?
   
   In the Second Offer, Kudelski cited the offer price premiums relative to the $1.00/share closing price of OpenTV’s stock as of February 26, 2009 as the sole valuation rationale for shareholders to accept their offer. In our opinion, the price of OpenTV’s stock at the depths of the global equity markets is not relevant. At that time, OpenTV was holding $0.74/share in cash on its balance sheet which has now grown to $0.81/share. By way of comparison, the NASDAQ index is up 55% since February 26, 2009 while Kudelski’s own stock is up 120% during that same period.
   
   
   
   
   
   
   OPEN LETTER TO OPEN TV STOCKHOLDERS
   PAGE 3
   
   
   2) Kudelski’s Offer Doesn’t Account for Synergies and Foreign Exchange Benefits
   We believe that the purchase of OpenTV would drive tremendous economic value and fill product gaps for Kudelski while the return on investment would remain attractive even at significantly higher prices. Based on our analysis of Kudelski’s financial performance, we believe that Kudelski’s earnings remain temporarily depressed from a recent change in its business model. Currently, because of accounting methodologies, Kudelski can only recognize 33% of OpenTV’s earnings while it recognizes 100% of revenues. By acquiring the remaining 67% of stock Kudelski could recognize 100% of OpenTV’s earnings, providing a boost to its own temporarily depressed earnings.
   
   Furthermore, Kudelski should also be able to realize incremental EBITDA contribution generated by synergies from overlapping research and development costs, redundant sales and marketing expenses, and elimination of public company costs and duplicative overhead. To be clear, we believe these synergies would be recognized by reduced spending in both organizations. However, these spending reductions can only occur once OpenTV is a 100% owned subsidiary of Kudelski.
   
   Based on conservative estimates, we believe that Kudelski would be able to recognize $25M of incremental EBITDA as follows:
   
   
   • An additional $10M of LTM EBITDA in its own financial statements by owning 100% economic interest of OpenTV, and
   • At least $15M in incremental EBITDA contribution from immediate cost synergies.
   
   
   Our analysis indicates there are also additional longer-term revenue and cost saving opportunities that are harder to quantify, which we have excluded from this analysis. When evaluating this incremental EBITDA contribution against Kudelski’s cost of acquisition, the value proposition is clearly apparent. Based on our analysis, the investment should pay for itself in 1.4 years at the $1.55/share offer price (see Exhibit 1). Given this short t
2. [verwijderd] 29 oktober 2009 23:09

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Our analysis indicates there are also additional longer-term revenue and cost saving opportunities that are harder to quantify, which we have excluded from this analysis. When evaluating this incremental EBITDA contribution against Kudelski’s cost of acquisition, the value proposition is clearly apparent. Based on our analysis, the investment should pay for itself in 1.4 years at the $1.55/share offer price (see Exhibit 1). Given this short time horizon needed to recoup any investment outlay we believe that an OpenTV acquisition would still be accretive to Kudelski at significantly higher prices.
   
   As a Swiss company, Kudelski benefits from the US Dollar weakening by 13% relative to the Swiss Franc since February 26, 2009. OpenTV has also increased their cash and short term investments balance since February, which further offsets Kudelski’s acquisition cost. After factoring in the change in foreign exchange rates and the change in OpenTV’s higher cash position, it is our view that Kudelski’s net acquisition cost has actually decreased between the First Offer and Second Offer (see Exhibit 1).
   
   3) Kudelski has an Overly Negative View of OpenTV’s Business
   In the Tender Offer documents, Kudelski discloses a set of projections from management dated May 26, 2009, which show billings revenue projections of $141.7M in 2010 and $154.2M in 2011, and billings EBITDA projections of $29.4M in 2010 and $33.2M in 2011. Kudelski also discloses their own projections for 2011 billings revenue and billings EBITDA (failing to disclose any projections for 2010). (See Exhibit 2 for a comparison of management’s and Kudelski’s projections.) While we discuss our concerns with Kudelski’s projections in the paragraphs that follow, we note incidentally that in our recent discussions with management, they refused to discuss with us the reason for the large variance that exists between the Company’s projections and those of Kudelski. We believe OpenTV management needs to respond to Kudelski’s projections and provide the basis for the variance between these two sets of projections with all shareholders to the level the playing field. We also note that the Company’s May 26, 2009 projections had been revised not once, but twice, pursuant to discussions that Kudelski had with management in connection with its First Offer. We believe that the Company should provide all shareholders with the basis for these revisions.
   
   
   
   
   OPEN LETTER TO OPEN TV STOCKHOLDERS
   PAGE 4
   
   
   Based on our understanding of the business practices in the industry, we believe that the projections given by Kudelski are overly pessimistic and unrealistic. Given the long-term nature of both customer contracts and deployment schedules, considerable visibility exists into future revenues and operating costs. Kudelski’s 2011 revenue projections are lower than management’s internal forecasts by 15-31%. To accomplish this steep revenue drop, OpenTV would not only need to lose multiple major customers but also have new customers break their contracts before deployment has even begun. Furthermore, based on the recurring nature of the Company’s revenues and normal replacement cycle for a PayTV operator’s set top boxes, it is difficult to justify a meaningful drop in revenues year-over-year. We view this as a highly unlikely event which was not appropriately conveyed or discussed in Kudelski’s disclosures and a possible reason for not disclosing 2010 projections. Given that OpenTV’s middleware software is the connective tissue in modern set-top boxes, we believe it would be uneconomical and infeasible for customers to switch suppliers suddenly in such a short time period.
   
   Kudelski also suggests that OpenTV has neglected to make appropriate investments in technology and research and development (R&D”). Kudelski states that OpenTV would need to increase their technology spend in 2011 over management projections by an incremental $10.8M to $34.1M, and increase aggregate R&D spend by an additional $100M to $150M over a three year period. In our opinion, OpenTV management primarily needs to increase R&D spend to opportunistically support new customer wins. Having spent over $233M in R&D expenditures since 2002, we believe the Company’s product remains competitive in the marketplace. We also believe that OpenTV’s recent announcement on September 11, 2009 of their new Core3 platform addresses many of Kudelski’s concerns and risks. Kudelski even acknowledges in the Tender Offer filing that this new middleware platform addresses some of the risks. As a result, we believe that estimates of both the erosion of revenues and the need for incremental R&D spending are overblown. In an industry driven by highly customized software products for a small group of customers, we do not believe that a strategy based on unfocused product development will be successful. We can only wonder why Kudelski wants to own all of OpenTV now if it expects the Company’s revenues and earnings to fall off a cliff at some point in the near future.
   
   4) Timing is Unusual and Leads to Information Asymmetry
   In our opinion, the timing of the Second Offer on October 5, 2009, only a few days after OpenTV’s third quarter ended on September 30, 2009, is highly unusual and suspect. Kudelski has the advantage of a unique and extensive insight into the operations of OpenTV. They are intertwined with the Company, and their deep ties include a presence on the Board, joint customer contracts and shared R&D projects. Conversely, as management is forbidden from commenting before their earnings release, shareholders do not share similar insight into the Company’s financial performance, recent developments at joint customers during the prior quarter and future projections. Until earnings are made public, shareholders are at a significant disadvantage to properly determine the underlying value and future prospects of the Company. We can only wonder why Kudelski chose not to announce their Second Offer after the last quarterly earnings announcement in August or wait until the third quarter earnings announcement.
   
   5) Kudelski Faces Significant Hurdle in Minority Squeeze-Out and Delisting Strategy
   In order to gain a majority of shares needed to effect a successful minority squeeze-out, Kudelski must acquire approximately 52.5 million shares to the reach the 90% share threshold (the Threshold Shares”). Based on our analysis, Kudelski needs to acquire an incremental 56% of the outstanding Class A float to reach the Threshold Shares. We believe Kudelski will find it difficult to successfully convince such a large portion of current shareholders, including OpenTV’s large institutional shareholders, to accept the current Tender Offer so far below intrinsic value. We also believe Kudelski fails to appreciate the significant institutional and corporate ownership represented in the remaining shareholder base. For example, if the top 5 shareholders do not tender their shares at the $1.55 offer, then Kudelski would need to purchase an incremental 89% of the remaining shares to effectuate a successful squeeze out.
   
   Kudelski has also threatened to de-list the OpenTV shares and remove it from the NASDAQ Global Markets which could have a negative liquidity effect on the Company’s shares. Through control of the board, Kudelski can force a delisting if the number of OpenTV shareholders falls below the minimum 400 required per the
3. [verwijderd] 30 oktober 2009 08:12

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Goed verhaal over OpenTV die dreigt opgeslokt te worden door een aandeelhouder ,die lakt heeft aan de belangen van OpenTV aandeelhouders en een verkeerde voorstelling van zaken geeft t.b.v eigen belang en voordeel.
   Als instituten dit niet zien, hebben ze een vracht boter op hun hoofd.
   Als iedereen naar zijn bank gaat om zijn geld op te halen, rolt die bank om.
   Als je al maandenlang roept dat er massa investments nodig zijn en dat je nu maar beter je aandelen kunt aanmelden, is er iemand bezig om de boel zwaar te verlinken.
   Dit is ongehoord op de beurs maar dat krijg je als een aandeelhouder alleen nog maar oog heeft voor zichzelf en de aandeelhouders OpenTV ziet als lastposten die zo snel mogelijk uit de weg geruimd moeten worden.
   
   Stel dat er helemaal geen bod lag maar dat Kudelski erop uit was om aandeelhouderswaarde te creeeren voor zichzelf en de aandeelhouders OpenTV.
   Dan hoorde je geheel andere geluiden in de persberichten.
   Die investments worden zwaar opgeklopt en dienen als middel om het bedrijf goedkoop in te lijven.
   Je kunt een plaatje maken dat er $200 miljoen nodig is voor de komende jaren, om te investeren.
   Het kan ook anders.
   Verantwoord en kritisch. Dit zijn de woorden van de CEO op een CC in 2009.
   Met behoud van positieve cashflow en winstgevendheid.
   Daar heeft Andre geen boodschap aan. Dat komt hem niet van pas.
   Hij heeft er goed over nagedacht hoe hij de beleggers zand in de ogen moet strooien en op het verkeerde been moet zetten.
   Tot nu toe, lijkt hem dat te lukken.
4. [verwijderd] 30 oktober 2009 08:44

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Dat laatste in die brief van Arcadia is wel een punt van aandacht. Kudelski dreigt de notering van OpenTV te beeindigen op de Nasdaq?
   Omdat men de meerderheid heeft in de raad van bestuur, zou men dit kunnen bewerkstelligen?
   Voor de rest is het de beste analyse over OpenTV in 2009, die aansluit bij de gedachten en gevoelens van de forumleden rondom het bod.
   
   Kudelski geeft een verkeerde en negatieve gang van zaken weer over OpenTV en zit zelfs onder de intrinsieke waarde van het bedrijf met zijn bod.
   Het is niet anders dan roof,oplichting en misleiding van aandeelhouders.
   
5. [verwijderd] 30 oktober 2009 08:48

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Arcadia Capital Advisors heeft in 2 maanden meer dan 1,24 milioen aandelen gekocht met een waarde van $1,9 milioen wat neerkomt op een gemiddelde aankoopprijs van $1.52. Die jongens hebben lef of ze weten wat ze doen. Ze geven in iedergeval de "kleine" belegger meer vertrouwen dat ze niet alleen staan als ze hun stukken niet aanbieden.
   Zie dat kotski group weer een nieuwe brief heeft uitgegeven waarin ze natuurlijk uitgebreid beschrijven dat discovery een groot aantal aandelen voor $1.54 heeft verkocht. Bangmakerij vind ik, bij mij kan ie het vergeten want die van mij krijgt hij helemaal niet. Ik zit niet 8 jaar voor niks te broeden op dit "goede" ei...
6. [verwijderd] 30 oktober 2009 08:52

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Kudelski moet 52,5 miljoen aandelen binnenharken, als ik het goed begrijp om OpenTV van de beurs te halen.
7. [verwijderd] 30 oktober 2009 09:01

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Het opmerkelijkst is dat Arcadia gesprekken heeft gevoerd met het management van OpenTV en daaruit is een analyse voortgekomen die oproept het tender bod van Kudelski te verwerpen!!!
   
   Dus je voert een tijd lang gesprekken met OpenTV en Arcadia komt dan tot de conclusie dat het bod niet de waarde van de onderneming vertegenwoordigd.
   Ook het opstappen van Eric J Tveter staat i.v.m het ondergewaardeerde bod!!! zegt Arcadia.
8. [verwijderd] 17 november 2009 14:56

   auteur info

   • [verwijderd]

     Lid sinds: 01 jan 0001

     Laatste bezoek: 01 jan 0001

   • Aanbevelingen

     Ontvangen: 0

     Gegeven: 0

   •    Aantal posts: 0

   Zal OPTV ooit nog stijgen. Ik ben ook een kleine belegger heb er 500 (al jaren). Wat adviseren jullie houden of verkopen? En wat zal ooit het verschil zijn? De poot stijf houden en niet verkopen (vanwege het principe?) of zit er nog potentieel in?