Stone sweetens offer for Linx
Credit card processor Stone announced on Thursday a premium to shareholders in software maker Linx in case they approve its merger proposal at the meeting scheduled for November 17. It will add R$0.50 to the price it initially offered to pay for Linx's shares, raising its proposal to R$32.06 per share. That amounts to R$89.5 million more for the company, for a total of R$6.4 billion. If it doesn't get that approval at the meeting, this premium loses validity.
Moreover, Stone also waived the breakup fee it had established for the Linx shareholders' deliberation on all steps of its offer. Before, if shareholders rejected the deal, Linx would pay R$112.5 million to Stone to reimburse it for costs of the offer. Last week, stock exchange B3 had informed Linx that charging the fee for the shareholders' decision of listing or not the combined company on special governance segment Novo Mercado, one step of the proposal's approval, would violate rules of the segment.
The other breakup fees, worth R$453 million and to be charged in case the companies decide not to proceed with the deal, or if antitrust regulator Cade doesn't approve the transaction, stay in place.
Following many shareholders' complaints about the governance in the Stone proposal, because of the fees and the non-compete agreement with the Linx founders, the card processor has already agreed to reduce the value of the penalties, removed those that would result from the shareholders' decision, raised the offer twice and renegotiated terms of the agreement with the founders, lengthening its duration. Some shareholders still complained that this non-compete clause, considered by some a control premium for the founders, stayed. Yet since the first revision of the proposal by Stone, in September, the agreement ceased to be essential condition for the deal. It is a private negotiation between Stone and founders, and Stone reckons that keeping them out of the competition is relevant for the business.
Nonetheless, if shareholders want to vote against Stone's proposal because of governance issues, they may now do it without the company having to pay the breakup fee. Most shareholders who spoke with Valor considered that the adjustments, and especially the cash offered by Stone, will determine the outcome. "Stone won this one," one of them said.
Stone will not buy Linx, other shareholders reckon, only if Totvs sweetens its offers, preferably...
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