After markets closed last night, Vendtek Systems (VSI.V) announced that it has adopted a Shareholders' Rights Plan (SRP). Clearly, this SRP is a prudent response to the accumulation of stock by its Middle East distribution partner. Through Privinvest, its UAE partner has acquired to date nearly 17% of VSI.V shares outstanding via the public markets. As far as I can tell, Privinvest has invested approximately $6.5 million to date based on the price range of accumulation. Within current stock price ranges, it would take approximately $1.0 to $1.2 million to acquire the remain 3.07% of the shares outstanding, which would give Privinvest effective beneficial interest in the Company. In other words, effective control.
The SRP is a tool that gives VSI shareholders an ability to block or delay unsolicited bids in order to maximize share value by creating a bid market through alternatives. Although I believe that a potential creeping takeover bid by Privinvest is essentially friendly, it is a prudent move by VSI management to protect shareholders. VSI is in a very good spot in the market that both its larger competitors, and complimentary payment networks would find valuable.
I suspect that there are to be some fairly major catalysts to be announced either at the end of this year, or early next year that could have positive impact on share value. The interesting question may be - will VSI still be an independent public entity when anticipated catalysts occur?
I do not own shares in Vendtek Systems, nor do I receive compensation from the Company, Management, or the Board.