Yousa want fries with dat?

[Ugohr Poof]

Now that Ugohr was back to Sullust after this sequence of business trips to Terminus and then on to Zonju 5, where Pizza Hutt followed their trail, he was, given the conditions given by his jailers, forced to play host to a business meeting at the Jedi Temple. His superiors, normally stationed on Malastare, traveled all that way to get the business deal sealed. Oh and Pizza Hutt is going to be the target of an hostile IPO. At this time IGR owns 7% of Pizza Hutt: purchasing the remaining 44% necessary (by Hutt accounting standards, this means buying 44% of the equity; since the headquarters have not been moved from Hutt space, Hutt law has to be respected) may prove difficult and it's not the same as with standard publicly-traded companies. Therefore the crown jewel defense may prove more effective than conventional poison pills, if the Ringovindian government (who, in turn, owns the parent corporation of Pizza Hutt, Ringovinda StarYards) decides to attempt defending the company. Privago and his lawyer team, including IGR's general counsel, arrived at the conference room in the Jedi Temple:

"Given dat theysa not a stock-traded company, and dat Huttese GAAP count da value of una company as issa equity, do yousa have any idea what kind of defenses to expect from them-sa?"

"All the common poison pills are ruled out since they all rely on some stock-related mechanism. Oh and do not expect them to take on a heavy debt load: it will make it cheaper"

"But a higher debt load would make it more expensive to run: do not forget that" the general counsel countered.

 

[Ugohr Poof]

Ugohr was forced to acknowledge that Huttese GAAP made defenses against hostile takeovers much more difficult: one could attempt to overinflate asset value but that method came with significant legal risks, which no one involved would like to do. Even Lorca the Hutt would not be able to keep the charade going for long, at least not without bribing the regulatory authorities. Yet he knew that IGR was under heavy Jedi surveillance, so if IGR wanted to buy Pizza Hutt they must be fully prepared to deal with the fact that Lorca the Hutt is a crime lord and must be ousted. For the past seven years, directors close to the Hutt were rotated out and replaced with more honest people, at the rate of roughly one a year, so that's not a given anymore that the transaction would be blocked: blocking the transaction required a majority vote. However, in the current condition, for the transaction to proceed, all of the newer board members, assembled in a holoconference, would need to vote for it.

"If wesa buyen Pizza Hutt, theysa know dat IGR issa under heavier Jedi surveillance dan Ringo. Disen Hutt issa still una crime lord"

"For this reason, if we buy Pizza Hutt, we need to remove Lorca, but everyone else on the board is staying: Lorca is the one with ties to organized crime. He may hold a 3% stake in Pizza Hutt but he still runs it day-to-day" Privago told the other two.

"Yet, under Huttese GAAP, if we buy the equity, there is only so much of a premium we can pay before the Hutt Council suspects foul play" the general counsel told them.

"Open a channel to the Pizza Hutt board" Privago ordered.

 

[Jessica Med-Beq]

I don't understand anything to this legalese: that's why I have Jessica - compared at least to me, she is a genius, and not the kind of genius either, Julie thought, while being, for some reason, on Pizza Hutt's board; looks like the stockholders wanted Julie in there for her perceived impartiality. And yet Commodore Jutland knew that Jessica was in the board meeting as a representative of the Ringovindian government who, in turn, owned the parent corporation, albeit nonvoting. Rarely were any nonvoting members present at board meetings, but here it was special: Julie informed Jessica that she was to attend and even offered a seat onboard the Alexandria's CIC over Zonju to this end. Rumors that a tender offer was going to be made abound. Telecommuting was a painful reminder that other business could catch up to either person no matter what. The Jedi admiral hoped that day was never to arrive, but unfortunately she had to deal with it, and she could sense that her boss would not.

"Ladies and gentlebeings, today we have grave news: some Jedi-related entity wishes to buy Pizza Hutt" the Hutt's interpreter droid told the others assembled.

"Any party familiar with Huttese GAAP must know that the value of a company incorporated in Hutt space is its equity" Pizza Hutt's general counsel told the others in the assembly.

"Speaking of equity, how much is our equity anyway?" Jessica asked, visibly unfamiliar with Pizza Hutt's balance sheet.

"That's about 750 million in assets right here, with some debt load of roughly 150 million" the accountant told the group.

"Pizza Hutt has 600 million in equity and that is the baseline" Julie said right here, while the channel was being opened with Privago.

 

[Ugohr Poof]

"So their equity is around 600 million: this means we need to spend at least 44% of that sum to get the 44% we need" Privago told his team, without noticing that the Hutt's men could overhear them.

"We buy the Hutt's 3% as part of that 44%. For this reason we have one condition: the Hutt must be removed from the board"

Huttese GAAP putting the company's valuation as being the same as their equity has its own implications: it makes banks nearly impossible to buy past a certain size, a company that uses bonds to raise funds or otherwise have high debt loads can be bought on the cheap, but Hutt regulatory authorities are usually more lenient for overpaying for companies when it comes to companies with high debt ratios, with the implicit understanding that part of the proceeds will go towards repaying said debt. But how much of a debt load is there? Also Huttese business practices usually ask that the CEO holds some stake or at least be in the good grace of the stakeholders. Yet Jedi and crime lords rarely go together unless said crime lords have Sith for enemies. The Gungan could feel that the relationship between Lorca the Hutt and the Ringovindian government soured from the moment there were actual Jedi on the board of the parent corporation of Pizza Hutt.

"Theysa not have dat much of a debt load"

 

[Jessica Med-Beq]

OOC: Because, from Jessica's standpoint, it would be telling the story from the standpoint of a NPC accompanying her, that is, Julie Jutland, this thread will be her laminanium thread.

IC: "You want Lorca the Hutt removed because Lorca has grown wary of the Jedi oversight both current owners would place Pizza Hutt under?" the comptroller asked.

"The Jedi know that I am a crime lord, yet Pizza Hutt allowed me to evade capture" Lorca commented.

"Do you promise to keep all the restaurants open?" Julie asked.

Julie could sense that something was not right with the reasons why the CEO wasn't removed yet. Simple majority was required to oust a director from the board; how could being at the top of a legal business allow someone to evade capture for gangsterism? Yet, there was common ground between the two ladies: Jessica is not completely opposed to majority ownership being under someone other than Ringo, and neither was Julie, at the condition that all restaurants would be kept open, and additionally, that all current contracts be retained. Yet, she seems a little hesitant to speak up about that issue of a possible takeover. Also, the Jedi may come hard on Lorca if the sale is allowed to go through but the Hutt Council did not block the initial sale that allowed Ringo to buy Pizza Hutt. Julie was uneasy when her fellow board members try to haggle the price upwards for the 44% at stake today.

"For 350 million, we may add an extra 4%. Also, do you promise to honor all contracts previously made?"

 

[Ugohr Poof]

"To honor that promise, Pizza Hutt must not merge. It must be kept in separate operation, just that it becomes the subsidiary of someone else. Then again, we will honor both promises" the general counsel told the other two.

"That's a little expensive for 48%"

"Yousa must remember dat virtually no una would accept a hostile takeover tender offer if there-sa no premium over da equity's face value" Ugohr told the numerically-challenged general counsel.

True, business law as applied to M&A was a little convoluted at times, and not even Ugohr could make sense of it all, despite having trained inmates in economics. Granted, he will soon be studying business by correspondence, as part of a Naboo Crown-sponsored program, as was often the case for those criminals whose education may be a little lackluster as part of their rehabilitation process (on the other hand, Gungan justice would not believe in rehabilitation to the extent the Naboo Crown does). But Lorca the Hutt realizes that he may have let a few words slip and feels a lot more comfortable, especially since his staff made him realize that there are three Jedi in this holoconference. Although none of the aforementionned Jedi are physically with the Hutt, Ugohr is a traveling Gungan B2B salesman by now, and he would need to travel unarmed so long as he takes the necessary precautions, now that he is under supervised release, with the remaining lightsaber on bail, he has to endure a multi-year supervised release. And he doesn't suspect that his job as a traveling B2B salesman is much more difficult because each off-world trip for work will require prior authorization from the probation officers.

 

[Jessica Med-Beq]

"Make that 375 million and you may get your hands on the 48%" the Hutt told the other board members.

Julie never realized that a merger would, in effect, dissolve one of the companies as a legal entity, which carries implications with respect to the contracts. Jessica, on the other hand, let out a sigh, after the general counsel gave its explanation as to what made this transaction more straightforward than an actual merger. Although, of course, in the context of corporate ownership, any transaction that would result in a change of majority ownership would require the transaction to be approved by the board. But Julie had better things to do than to simply be the voting representative of Ringovinda StarYards in Pizza Hutt's board: she knew that her position on the board is coming at an end. And Julie had no idea whatsoever as to whether IGR would be buying it with cash on hand, or with some debt. And Jessica was taken out of the holographic projector's range to get a few words with Julie, who also stepped aside:

"How do you feel, Julie, to know that your time on Pizza Hutt's board may well be over?"

"To be frank I never did get involved in Pizza Hutt's affairs for one moment: today I am forced to do it because of the circumstances"

 

[Ugohr Poof]

"Here's the final tender offer: 375 million, we buy 48%, including the 3% Lorca the Hutt owns, in exchange of which Lorca the Hutt is fired, all locations will remain open and all outstanding contracts remain on the books, and so will not be merged into any other company" Privago announced.

"Yousa must realize by now that yousa under heavy Jedi surveillance as wesa speak, Lorca da Hutt, so yousa may as well use disen money to buyen another business dat no issa under heavy Jedi surveillance"

So Lorca the Hutt would get 23 million credits for what stake he held in Pizza Hutt, resulting from the majority company ownership passing from Ringovinda StarYards to IGR, which no longer means anything as an acronym. The other Jedi in the temple are nervously watching, but since taking criminal elements off legitimate businesses may be a good thing, most Jedi stationed in the temple don't seem to be overly worried about it. And yet one of those Jedi knocked on the conference room door, hoping to ask what purpose did Ugohr pursue in using (or perhaps hogging) the conference room. Said conference room was a little small, and was used for a while. It would seem that students are waiting on them to finish the business and then Privago would send out the document that would finalize the transaction, so that Pizza Hutt would then be IGR property (and a subsidiary thereof) rather than Ringovinda StarYards property.

"Yousa have a little bit of patience, please: wesa in negotiations to buyen a company away from criminal hands. What do yousa want to do with da room?" he asked the Jedi.

"We want to train in psychometry"

 

[Jessica Med-Beq]

"I propose that we vote on the tender offer given by IGR!" one of the board members exclaimed, believing that time is of the essence for the others.

"According to the business laws of the Galactic Alliance, a board vote is required. Those who are in favor of the tender offer, say aye" Lorca the Hutt told the rest of the board through his protocol droid.

"Aye" Julie said, along with a few others, when she returned back to the holocommunicator.

Julie was nervous, and Jessica as well, but for different reasons: Jessica did tons of things for Pizza Hutt lately, and Julie could then go back to not caring. They did have their round of debate first, in secret (but nevertheless recorded in minutes, since it was going to matter for legal purposes, too, but here Pizza Hutt's general counsel is their secretary), especially as the round of naysayers were going to be heard as well. As both ladies expected, it was a close vote. Everyone and their dogs in the mergers and acquisitions world knew that simply accepting the tender offer was just the beginning of the paper trail: antitrust regulatory authorities were generally feared in certain circumstances, but Jessica knew that it would not be a problem, since fast-food industries also had another major competitor based in Alliance space which is, in fact, nationalized: Mirai Confectionery. Both ladies held out hope that there would be enough abstentions to allow the sale to proceed, and it was a very close vote where any individual vote could have sealed or nixed the deal.

"The ayes have it, the transaction may proceed"

 

[Ugohr Poof]

"The regulatory authorities won't bat an eye for small companies, but larger companies are more heavily scrutinized when it comes to M&A processes" the general counsel told the two other people.

"Wesa vacaten da conference room" Ugohr told the Jedi waiting for the conference room to be freed up.

Privago realizes that there are tons of paperwork that need to be signed: either Lorca the Hutt travels to Malastare or Privago travels to Nal Hutta with the paperwork in tow. Said paperwork is being prepared with Ugohr and the general counsel. Unfortunately, none of the three seems familiar with Huttese GAAP (generally accepted administration principles) beyond "the valuation is the equity". Later on, the three people vacate the conference room, while duplicates are being produced for each document that the acquisition entails: luckily the Huttese bureaucracy seems pretty lean, while the Alliance only asks for the latest balance sheet in addition to that. Even so it's still a small mountain of paperwork, especially since the question of the market share is something that is in the back of all three people's minds. The point of antitrust laws is to prevent oligopolies especially in markets with rather low barriers to entry; sometimes high barriers to entry may cause a problem from an antitrust standpoint, and that made Ugohr nervous, especially since Mirai Confectionery, MandoBurger and TKFC were the main competitors in that market.

 

[Jessica Med-Beq]

"You won't have to do anything with the paperwork of Pizza Hutt's sale" the general counsel told both Julie and Jessica in private.

Both Jessica and Julie were relieved when the general counsel informed them that neither person would have to touch any of the paperwork involved in actually closing the deal that made Ringovinda StarYards sell 48% of Pizza Hutt to IGR. Believe it or not, but the amount of paperwork involved is staggering: one has to submit X documentation to such regulatory authorities, but Jessica informed Julie that mergers are more closely scrutinized than merger-less acquisitions. To Julie's knowledge, IGR did not hold a stake in Mirai Confectionery, MandoBurger or TKFC; they unceremoniously closed the holoprojector as their involvement in this process ended.