Turning the Tables
The story so far: Kudelski originally offered to snap up the Class A shares of OpenTV it already doesn't own for $1.35 each, or roughly $130 million. A special committee assigned by OpenTV later rejected the bid, holding that it's "inadequate and not in the best interests of the Company and its stockholders." In response, Kudelski severed talks with the Committee, suggesting that it would pressure OpenTV, via its presence on the board, to keep the company viable for the long-term by making significant investments in new technologies and platforms through acquisitions and other means. (See Kudelski Walks Away… Sort Of, OpenTV Rejects Kudelski Bid, and Kudelski Wants Its OpenTV .)
Discovery, OpenTV's largest independent shareholder, sent its suggestion to the OpenTV board, labeling Kudelski's bid as "low" and its assessment of OpenTV's prospects as "derogatory." Moreover, Kudelski's position as controlling shareholder is a "terrible state of affairs" for OpenTV, Discovery added.
Discovery's letter also suggests that Kudelski's "primary ambition is to maintain unfettered access to excessive idle cash at OpenTV, amounting to $114.2 million at March 31, 2009, in order to pursue large-scale acquisitions and capital spending projects for the benefit of Kudelski's global enterprise." Ouch.
In Discovery's view, the better alternative is for OpenTV to use about half its available cash to buy-out Kudelski for about $60 million.
That, Discovery added, "would provide Kudelski with the funds it needs for its own expansion while leaving OpenTV with more than enough residual liquidity to safely operate its business and to fund its promising growth opportunities."
Kudelski, the ball is now squarely back in your court...
— Jeff Baumgartner, Site Editor, Cable Digital News