Truth in tender offers? An eyewitness account.
U.S. Securities regulators on Thursday sued a well-connected Kuwaiti financier, saying he reaped millions in suspicious profits after false takeover reports briefly sent shares of Harman International Industries soaring this week.
Reuters reporter Ransdell Pierson was in the office working the Sunday shift when he received a fax with the purported takeover offer. Unable to verify the authenticity of the fax, Reuters did not publish the story. Here is Ransdell’s first person account of what happened, and a copy of the fax. Would you have questioned its veracity?
I was scouring newspapers on a Sunday shift in the Reuters New York bureau and waiting for news about distressed lender CIT Group, when the phone finally rang and broke my reverie. “Newsroom,” I said, and the caller replied, “Your Jeddah bureau is closed today. Can I send you a fax?” The male caller, who I imagined to be a middle-aged office aide frustrated by the thankless chore of delivering his fax, said it was a press release about a deal. Something about one company buying another for about $3 billion.
“If it’s such a big transaction, shouldn’t this news be coming over the PRNewswire or BusinessWire?” I asked him. He explained that it was the weekend, so faxing a press release was the best route.
I gave him a fax number and he called back, irritated the document hadn’t gone through. I gave him another fax number and he soon called back again, more irritated than before. So I gave him the number of a third Reuters fax machine, but told him that it needed to include contact information for all the parties. “Otherwise, we can’t authenticate it.” “OK, you’ll have it,” he replied.
But when the single-sheet document arrived seconds later, it was bereft of any contact info.
Topped by a legitimate-looking APG logo [standing for Arabian Peninsula Group] , it described an offer by the group to buy U.S. stereo equipment maker Harman International Industries. It was plausibly well written, so I did not dismiss it out of hand. But I was skeptical.
Finding no references to the Arabian group in the Reuters databases or Google, and unable to reach any Harman officials for verification, I was glad I hadn’t sent any headlines out about the “deal” on the Reuters wire.
I followed up by calling my editor at home and telling him about the calls, and the fax. He said the 100 percent premium for Harman, in this economy, seemed outlandish. “I’m sure it’s a hoax.”
Even so, the last thing I did that night, after going home, was to do one last Google search — to see if any other news organizations had carried the “news.” The headline from the press release did appear on one or two websites, but not on any major news organizations. I slept well.