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SW Saskatchewan | Does Titan do a cash buyout of these companies or is it a stock swap?
We have several car dealership chains in western Canada that look for dealerships that are in the process of generation change, manager burnout or underfunded when the Car Company demands a new multi-million dollar building "to maintain the company image".
The buy-out is generally in the form of shares in the dealership chain that are nominally "tradeable" on the stock exchange. In reality, the sellers generally have a restriction on the resale of their shares in that only so many can be sold per year, if the current manager stays on or if the operation is jointly owned, then the resale restrictions are quite severe. "Cash" payouts are generally in the form of interest bearing debentures only cashable in the future.
The business model was developed by a Canadian Funeral Home company, Loewen, that used it to acquire 1100 funeral homes and 400 cemeteries in Canada and the US. The company collapsed in 1999 after an American lawsuit(Canadian companies can't believe that the US has laws that really mean something) caused cash problems at the same time as many of these "obligations" were maturing.It went through bankruptcy before reemerging as a much smaller company in 2002.
The firms that had sold to Loewen often ended up with a lot of paper of limited value after the re-organization.
As WyDave has said so many times "as good as cash isn't cash!". | |
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Titan Machinery buys another dealer
