Evine Live (EVLV) – Merger Arbitrage – 94% upside

Current Price – $1.37

Buyout offer –  $2.66

Upside – 94%

Expiration Date – TBD (currently unsolicited offer only)

Press release

This idea was offered by Vladimir.

 

Last week Evine Live received an unsolicited offer from Segel Vision at 105% premium to market price. Shares are up 25% since the announcement and huge (94%) spread remains. Clearly the market does not believe transaction will go through or that the offer is solid.

Offer was acknowledged on Q3 conference call, but only one analyst asked about it and company has not made any other comments otherwise:

“Mark Argento

And then last one from me, obviously there’s been a little bit of buzz in the press here with this overture by the Siegel Group [ph], is there a kind of a canned answer that you guys are giving, what’s the perspective from the company in terms of some of the things that have been put out in the media?

Tim Peterman

Yeah, we have seen those articles as well. And certainly we have a robust independent board that evaluate all communications from investors like this. And so I can tell you that — this process of that communication has been no different and our team evaluates that, our board and our finance committee. And certainly from Bob and our perspective we are flattered by the interest that everybody recognizes that we are undervalued. When you look out at the opportunity for us from stakeholders perspective we’re just starting our growth phase and so I think it’s just a flattering notion that people recognize we are undervalued, we appreciate it.”

2 COMMENTS

  1. dt

    I am tempted to agree with the market on this one as I do not believe Segel Vision offer is real:
    - Their app (STARSHOP) with which they want to merge EVLV hardly has any popularity. Their website seems to be equally unpopular (at least judging by available traffic info and google trends info).
    - Starshop is quite new (established in 2015) but there have not been any news about it since 2015 (except for the latest release).
    - Apps on both Apple and Android stores have not been updated since 2015.
    - CEO of Segel Vision used to work for EVLV till 2014, so looks like he is playing some kind of game with his previous employer.
    - Press release claims “Segel Vision’s financing is bona fide, and in place” however, it is hard to see how a seemingly unpopular app could come up with $175m.

    The sector itself (tv home shopping networks) is definitely in stage of consolidation and number one player (QVC led by Malone) is buying out no.2 player (HSN). EVLV claims to be No.3 in the market and it is way cheaper compared to the two leaders on EV/Revenue and EV/Gross profit metrics. However, EVLV is also the only one that has been consistently unprofitable. Cost synergies in case of merger would be significant and in the hands of bigger player EVLV TV networks could easily turn cash flow positive. However, so far noone (except for Segel Vision) has approached the company even though its share price is at all times low.

    This VIC article nicely outlines the bullish thesis (not related to merger with Segel Vision) for EVLV https://www.valueinvestorsclub.com/idea/EVINE_LIVE_INC/140346

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