Canadian winery Vincor is the target of a hostile takeover bid by US wine conglomerate Constellation Brands. Curiously, Vincor has announced that it has changed the terms of its poison pill so that the pill no longer applies to Constellation's bid.
I find this a most puzzling development. Why would the target of a hostile bid voluntarily and unilaterally disarm in this fashion?
A possible explanation is suggested by Vincor's statement:
Following discussions with major shareholders, the Board of Vincor firmly believes that Constellation?s $31 offer will be rejected. ... Vincor has had ongoing discussions with Constellation through its financial advisors and has communicated that the company is prepared to grant access to material non-public information if Constellation signs a confidentiality agreement consistent with those signed by other interested parties or if Constellation proposes an acceptable price.
Perhaps Vincor's management cut a deal with the principal shareholders, pursuant to which the latter agreed to reject Constellation's current bid provided that management agreed to credibly commit to accepting a higher offer by defanging the pill. (Or perhaps former Canadian defense minister Hellyer's space aliens have used their mind control rays on Vincor management.) An Ontario-based investment blog speculates:
... look for Constellation to make another bid, paying a premium (20%?? - $6) over the current price. Of course, being the holiday season, this Q will show the numbers to support $40 or $41 offer price from Constellation (just a hunch...).
What I don't know is whether Ontario corporate and/or securities law would allow the Vincor board to "just say no"; i.e., to simply refuse to redeem the pill no matter what Constellation or Vincor's own shareholders did. Any Canadian law experts care to enlighten us?
