Filed under: Deals, Management
In Tuesday’s brutal trading, it was tough to find a positive stock price. But Ocwen Financial (NYSE: OCN) bucked the trend. The stock price surged a hefty 53% to $6.09.
This occurred after Ocwen’s CEO, William C. Erbey, lobbed a $7 buyout offer for the company. He’s backed by Oaktree Capital Management, L.P. and Angelo, Gordon & Co., L.P.
In response, Ocwen’s has formed a special committee of independent directors and has retained investment bank Evercore Group (NYSE: EVR) and law firm Shearman & Sterling LLP.
Ocwen is a processor of loans and mortgages. No doubt, it’s been a tough business lately. For example, net income for fiscal Q4 fell from $17 million, or $0.25 per share, to $6 million, or $0.09 per share. In the press release, Erbey said: “Overall, the current liquidity environment had a significant impact on our third quarter results.”
And as seen with problems at Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER), the liquidity problems persist.
So, in the buyout deal, Erbey states he will make a “significant” investment in the transaction. He also wants to continue to remain the company’s CEO.
And with a 31% ownership stake, Erbey certainly has a lot of influence on this deal.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He also operates DealProfiles.com.
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