If you can’t beat’em, join’em: Activist hedge fund Appaloosa Partners, whose proposal to bail out auto parts maker Dana Corp. is losing out to one offered by private equity firm Centerbridge Capital Partners, has suggested that the two firms join forces.
In a letter to Dana’s board of directors yesterday, James Bolin of Appaloosa continued to rail against the Centerbridge deal, which his firm claims destroys shareholder value. Dana accepted Centerbridge’s offer in July.
Though Appaloosa’s deal “is materially superior” to Centerbridge’s, “your professionals and certain of your constituents intend to resist it while you go through the motions of a formal ‘auction’ process,” Bolin complained. But then he offered Centerbridge an olive branch, albeit one that the New York-based p.e. firm is unlikely to accept.
“While we believe that our Sept. 21 proposal offers the greatest value to the estate, we are certainly amenable to discussing compromises or alternatives that could further enhance the transaction for all parties,” he wrote. “For example, we could envision a potential transaction structure in which Centerbridge invests $250 million in the Series A Preferred stock with controlling governance provisions, and Appaloosa provides the fund for $500 million Series B Preferred Stock investment and rights of offering.”
Appaloosa is Toledo, Ohio-based Dana’s largest shareholder, and also claims to be a major holder of Dana debt.
Bolin added that Appaloosa’s offer expires on Oct. 9, putting to rest questions that the recent General Motors’ strike had voided its proposal.