Brazilian homebuilder Gafisa (GFA, quote) has clawed its way back after plunging last week, so it seems that traders are either not disappointed over its refusal to accept an insulting buyout offer or simply have short memories.
Last week, Gafisa management rejected a preliminary proposal submitted by local asset manager GP Investimentos and U.S. billionaire Sam Zell’s Equity International to buy the company. The information motivated a sharp drop in the company’s already-depressed stock price.
Now, however, GFA shares are nearly back where they were before the proposal was announced and publicly refused.
In its statement, Gafisa management said a team of financial advisors determined that the buyout’s terms “significantly undervalue the assets and businesses involved and imply substantial transaction costs and high execution risk.”
GFA says it received the proposal on February 2, at which time at which was unaware of a possible offer to purchase company’s shares.
Management had previously denied rumors that foreign investment funds would launch a takeover bid — solicited or otherwise — for control of the company.
In a note sent to the Brazilian Securities Commission (CVM), Gafisa added that the company is not opposed to future offers on principle, but warned that it will “evaluate new opportunities to develop their businesses and evaluate with the same diligence.”
If so, then it will probably take an offer of significantly more than $6 a share to get them to sell.
Whether that proposal arrives or not, in the meantime Gafisa seems determined to go its own way.