Audible Inc. [ADBL] shareholder Red Oak Partners LLC on Friday blasted Amazon.com Inc.'s [AMZN] $11.50 a share, or $300 million, deal to buy the online audiobook retailer. In a letter sent both to Audible and Amazon, Red Oak says the price is too low and that it intends to vote its 1.4% stake against the deal.
Red Oak's objections stem from the premium being paid for Audible. It notes that Audible shares fell more than 20% in December after the company's largest shareholder, APAX Managers Inc., disclosed that it had registered to sell nearly 6 million shares of Audible stock. Amazon's offer represents a 23% premium to the value of Audible shares the day the deal was announced, when the stock traded at $9.33. Red Oak contends that Audible's banker, Allen & Company, should have evaluated price premiums versus its share price before the regulatory filing was made. Indeed, shares of Audible traded at $11.30 before APAX's Dec. 6 disclosure, slightly lower than Amazon's $11.50 offer price.
It's unlikely that Red Oak will be able to drum up enough support to thwart a deal. No other buyers have stepped up to top Amazon's offer, and no other large shareholders have expressed similar objections. Some shareholders have filed litigation against the company for allegedly getting an inadequate price, and Red Oak indicated it will consider joining that lawsuit. - David Shabelman