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Accredited Home Lenders saga coming to an end

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September 22, 2007 – Comments (2)

My second blog on CAPS, or anywhere else for that matter, was on private equity firm Lone Star's offer to buy Accredited Home Lenders (LEND) for what seemed like a ridiculously high price of $400 million or $15.10 per share back in June.  I was somewhat skeptical and thought it was more than a little curious that a buyer could come up with a price for the company when quarterly reports hadn't been filed for some time.

With the deterioration of the mortgage market over the summer, LEND traded below, sometimes way below, the buyout price as investors gambled the deal wouldn't go through.

Subsequently, Lone Star attempted to lower the offer price to $8.50 a share.  LEND balked and started legal action to force Lone Star to complete the deal at the original $15.10 price.

On Wed of this week, the two firms renegotiated the buyout price to $11.75 a share.  That looks like it'll close this chapter of mortgage lender mania. 

I have no financial interest in LEND or Lone Star. 

 

2 Comments – Post Your Own

#1) On September 23, 2007 at 11:02 PM, floridabuilder2 (99.26) wrote:

hopefully it gets renegotiated down again, or else i get a red thumb on this caps score

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#2) On September 24, 2007 at 12:31 AM, rd80 (98.44) wrote:

From the little I've been following this, I thought the 8.50 offer was generous. LEND's real value is probably negative.

No point closing the pick now, but the press releases make it sound like 11.75 is agreeable to both sides.  Probably cheaper for Lone Star to go through with the deal at that price than to risk fighting it out in court.

If I ever get rich enough to invest in a hedge fund/private equity deal, Lone Star is off the list (I'm sure they're shaking in their boots). Unless there are some under the table, back room payoffs involved, this buyout offer has to rank as one of the dumbest financial moves in history. 

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