The Strange Case of Travelzoo (TZOO)
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ChaPaVe Partners created quite a stir in Travelzoo (Nasdaq: TZOO) Friday after announcing plans to commence a Tactical Tender Offer for up to 1,500,000 shares at $40 per share. In addition, the group said after shares are tendered, it would like to examine a "take private" offer. Although shares jumped higher on the headlines, questions about the validity of the offer immediately began.
The obvious redflag was ChaPaVe’s website - "www.chapave.com." It was registered less than one month ago on 8/22/11. Also the site is just one page and looks like a child made it. The title reads "Things Swing Artificially Too Far in One Direction... Then They Revert" with an animation of a pendulum swinging.
When asked about the validity of the offer, Read Rankin, the lawyer representing the investment group, said it was "legitimate."
Rankin, who has an e-mail address at the chapave.com domain, said ChaPaVe was set up specifically for the Travelzoo deal, which he said explains the newly created site.
The names of the parties involved with ChaPaVe were not disclosed, with Rankin saying the parties wish to remain anonymous at this point. However, he said they are seasoned investment professionals.
While he said the offer is real, the group has not yet raised the required funds to buy the 1,500,000 shares being tendered. Rankin said they have been talking with investors. When asked if it was legal to launch a tender offer without the fund necessary to complete it Rankin said it was and added "others do it all the time."
Rankin said at some point Travelzoo management will be contacted, although they have not yet initiated talks.
He said ChaPaVe Partners will file a TO-C document with the SEC later Friday and other documents on the tender offer on October 18, 2011.
While questions remain, shares are hanging in there, currently up 4 percent to $33.63 in mid-day action Friday.
The obvious redflag was ChaPaVe’s website - "www.chapave.com." It was registered less than one month ago on 8/22/11. Also the site is just one page and looks like a child made it. The title reads "Things Swing Artificially Too Far in One Direction... Then They Revert" with an animation of a pendulum swinging.
When asked about the validity of the offer, Read Rankin, the lawyer representing the investment group, said it was "legitimate."
Rankin, who has an e-mail address at the chapave.com domain, said ChaPaVe was set up specifically for the Travelzoo deal, which he said explains the newly created site.
The names of the parties involved with ChaPaVe were not disclosed, with Rankin saying the parties wish to remain anonymous at this point. However, he said they are seasoned investment professionals.
While he said the offer is real, the group has not yet raised the required funds to buy the 1,500,000 shares being tendered. Rankin said they have been talking with investors. When asked if it was legal to launch a tender offer without the fund necessary to complete it Rankin said it was and added "others do it all the time."
Rankin said at some point Travelzoo management will be contacted, although they have not yet initiated talks.
He said ChaPaVe Partners will file a TO-C document with the SEC later Friday and other documents on the tender offer on October 18, 2011.
While questions remain, shares are hanging in there, currently up 4 percent to $33.63 in mid-day action Friday.
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