Packeteer Puts A Moat Around The Castle (PKTR)

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Shares of Packeteer Inc. (NASDAQL PKTR) are up well over 10% on a buyout offer today.  Packeteer already rejected this buyout offer, and in fact it went and adopted a poison-pill provision.  The buyout came from two tied funds led by Elliott Associates at a $5.50 per share price.  While that is a 44% premium to the 52-week low of $3.81, it is still well under half of the $12.74 high seen over the last year.

We have actually screened this stock for our "10 Stocks Under $10" weekly newsletter, although it has never made it past the review stage.  This one came to us under our screens of 52-week lows when so many stocks were hitting them.  We’ll probably expedite a review as Packeteer said it had interest from other buyers in SEC filings.

After a poison-pill, it will be only "at the company wishes" that it gets acquired.  We searched Capital IQ under the takeover defenses and other provisions the company has in place are 3-year board membership terms, required advanced notice for director nominations, non-ability for shareholders to act by written consent, and no shareholder preemptive rights.

Packeteer’s above-premium buyout is almost $217 million.  Shares are up almost 13% to $5.90 today.  It’s always good to get a buyout offer after your stock has slid, but frequently management just cannot accept offers that are so much less from where shares have recently been. 

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.  You can join the open email distribution list to hear about additional M&A, spin-offs, break-ups and more.