Is ITEX (U.S.A. Largest Barter Co.) About To Be Acquired?
December 13th, 2007 · by Bob Meyer · 8 CommentsThe largest trade exchange in the U.S. may be acquired by a restaurant (steakhouse) chain…
Western Sizzlin Corporation (OTC Bulletin Board: WSZL) today announced that it will commence an exchange offer for all outstanding shares of ITEX Corporation (OTC Bulletin Board: ITEX). The exchange ratio for the offer will be .06623 shares of Western common stock for each outstanding share of ITEX common stock.
On December 12, 2007, the closing price of a share of Western common stock was $15.40 and the closing price of a share of ITEX common stock was $0.90. Based on these closing prices, the exchange ratio for the offer represents a value of $1.02 per share of ITEX common stock.
For a look at ITEX’s latest annual earnings see: ITEX
This entry was posted on Thursday, December 13th, 2007 at 1:50 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 14th, 2007 at 7:51 am
Bob:
The offer that is being tendered is so low that ITEX stockholders (myself included) will not even consider it.
I look for the ITEX CEO to politely decline the offer. The Lions Fund (aka Western Sizzlin) is owned and run by a 29 year old CEO of a steakhouse chain that does not even trade his restaurant certificates. His other holdings include Steak n Shake (7%) and an ice cream company, where he declined an offer to sit on the board.
December 14th, 2007 at 8:22 am
Bob:
Is this offer welcomed by Itex management? What does Western Sizzlin intend to do with Itex if they are successful?
December 14th, 2007 at 8:43 am
Carl, We expect to hear from ITEX management in due time. In the meantime you should find the above comment by Herb Steck interesting.
December 14th, 2007 at 9:22 am
I don’t think this will happen, but it will be intereting to watch. Please keep up posted Bob.
December 14th, 2007 at 9:27 am
It sounds like the young CEO has too much time and money on his hands to me! That is quite a lateral diversification of interests, although could be quite strategic based on the direction of our current economy. However, if it is a strategic move, why buy a listed barter company that obviously will be effected by declining stock markets as the economy crashes? A better option would have been to approach or invest in a privately held barter company like the one I run in NC for Merchants Barter Exchange.
Any news in the barter industry is good news and change is inevitable. I look forward to fruitful business dealings and much success in 2008 (whatever happens with the buy-out).
December 14th, 2007 at 1:50 pm
This may seem counterintuitive to us in the barter industry, but Sardar Biglari professes not to be interested in synergies among his corporate holdings. For him, the restaurant chain (Western Sizzlin) is simply an investment vehicle. Biglari is focused on Warren-Buffet-style “value investing.” In this context, it may not even matter that ITEX is a barter company. It could just as easily have been a widget company that caught his interest. What matters from the value investment standpoint is that ITEX’s market value (share price x total number of shares) is — in what I think must be Biglari’s view — significantly lower than its intrinsic value, which is based on fundamentals such as free cash flow. All the terrific synergies that barter professionals would see in such an acquisition, might be irrelevant to him. It will be interesting to see whether Bilgari, if he succeeds in gaining control, will find barter synergies despite his professed disinterest in them. Why? For one thing, value investors are also big on reducing operational costs to help improve shareholder value. Obviously leveraging T$ could help accomplish this goal, especially if ITEX has really substantial T$ reserves. (I don’t know if they do or not. I personally know of only one large barter company that does.) By the way, don’t be misled by Biglari’s age, now 30. Read the extreme honesty and maturity reflected in his FY2006 letter to WSZL shareholders, available as a PDF on that company’s website.
December 14th, 2007 at 1:57 pm
Additional note: The “ice cream company” mentioned in someone’s post is actually a sizeable New England restaurant chain that secondarily has been making ice cream for over 70 years. After acquiring 15% of that company’s outstanding shares, Biglari requested two seats on the board. He wanted changes, reportedly because existing management had been draining cash, essentially taking value from shareholders. Biglari was rebuffed by the board and the entire company was instead sold to another buyer at a hefty premium to the share price Biglari had paid. So he was right: the company HAD been undervalued.
December 16th, 2007 at 4:59 pm
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