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Stone amasses Linx stock before meeting on deal

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Software producer Linx has scheduled for November 17 the shareholders' meeting that will evaluate a buying offer from payment processor Stone, and the moves to ensure the number of votes necessary for approval of the deal are likely to intensify.

On the one hand, Stone has announced that it was buying Linx shares on the market. On the other, the Linx founders, key pieces in this strategy, formally consulted the Securities and Exchange Commission of Brazil (CVM) to know whether they will be able to participate in the deliberation.

Stone has informed that it had amassed a 5.8% stake in Linx after purchases on the market. According to its statement, the purchases were made "in the context of the proposal of merger" with Linx, but are "independent in relation to the transaction." It also said that exercising the voting rights of the shares that exceed 4.9% would depend on prior approval by the Administrative Council for Economic Defense (Cade). Sources say that Stone wants to avoid any position of conflict or questioning about potential meddling in Linx's decisions for having a relevant stake in the company that is also its target.

If Stone further increases its stake and gets Cade authorization, it may be a very relevant shareholder in the meeting. According to Linx's bylaws, an investor is only required to make a public offer for purchase of the entire company when it reaches 25% of the capital stock.

On the other hand, if the Cade limits voting to 4.9%, the entire surplus shares that Stone holds will be out of the vote counting. This could also affect votes against the offer, since the total number of votes counted would fall.

Some sources say Stone's move indicates its concern with the success of its proposal in the meeting. Market purchases of shares indicate that Stone used the cash it had available to buy shares from those interested in selling them, to get out of the business without waiting for the meeting. One example is foreign investors, who are taxed in a merger, but not for the capital gain with the stock alone.

Most lawyers specialized in corporate law saw no problem in the stock purchases by Stone, even because the company communicated them to...

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