Confidentiality is critical in a private equity deal. In fact, prospective bidders for a company must sign very strenuous non-disclosure agreements before they can participate.
Basically, leaks can interrupt a deal and even derail it.
However, leaks seem to be common lately. For example, in the buyout process of Harrah's (NYSE: HET), there were two major leaks.
Well, the buyout for TXU (NYSE: TXU) may have had similar problems. After all, it was last Friday that CNBC reported that a deal was imminent.
Also, according to a piece in the Wall Street Journal [a paid publication], there was heavy trading in TXU stock options on Friday (18,000 contracts). The stock price also spiked 4.1%.
In other words, some traders made a tidy profit. The problem: if they had access to nonpublic information, it is also illegal.
Basically, this is the kind of thing that hopefully the SEC is looking at. Yes, there could be a new scandal brewing.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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Reader Comments (Page 1 of 1)
5-09-2007 @ 7:04PM
Cleveland Thornton III said...
None at this time.