GVI sale not going smoothly?

Just got word that GenNx360 (how do you even say that?) is upping its price offering for acquiring the outstanding shares of GVI Security Solutions. Not by much, but there are a lot of shares out there, and fractions of pennies can represent real dollars:
GVI Security Solutions, Inc. (OTC:GVSS) (BULLETIN BOARD: GVSS) ("GVI"), GenNx360 GVI Holding, Inc. and its wholly-owned subsidiary, GenNx360 GVI Acquisition Corp., today announced that, in connection with the existing tender offer to purchase all of the common stock of GVI as set forth in the Offer to Purchase dated November 3, 2009, GenNx360 GVI Acquisition Corp. has increased the purchase price of the shares from $0.38 per share to $0.3875 per share, net to the seller, in cash. All references in the Letter of Transmittal to the price of $0.38 per share shall be deemed to refer to the increased price of $0.3875 per share. Accordingly, if you have already tendered your shares, there is no need for you to submit another Letter of Transmittal in order to receive the increased price.
At 27 million shares outstanding, the increase in price represents a little more than $200,000, an increase of about two percent in the offering price. However, now that I really look at this deal, the purchase price seems awfully low. $10,462,500 for a (marginally) profitable company with $46 million in revenue? Damn. They're reporting EBITDA of $1.81 million for the most recent 12 months, so the purchase price is only 5.8x EBITDA? For a company with 11 straight quarters of profitability and an association with the Samsung brand that should ensure there isn't a quick drop off in revenues? That seems low, too. Am I missing something here? Is my math bad?


This deal seems like a total rip off of shareholders. GVSS mgmt, even though they will be staying with the newco, get a huge payout (guarantee on 2009 bonus and PLUS a further $300K payout EACH which was cited for why the buyer's dropped the price from 0.41/share to 0.38/share. mgmt benefits shareholders got lower price.

The fractional price increase you cite is not any indication of deal in trouble but was simply a token bone (in addition to late stage reduction of the huge termination fee) thrown in rubber stamp and bless a quick settlement deal on the class action lawsuit. Settling attorneys get to show increase in value and get paid for little work. Shareholders of GVSS ought obtain counsel and file an objection to the settlement. But most importantly they need to quickly find a synergistic buyer who will top gvs insider buyout. GVSS board signed away the right to shop the deal to highest bidder PROBABLY before EVER shopping the company at all. We see this all the time. We know of at least one company that was never shown the deal because mgmt likely would not have been retained.

[...] when I was dumbly wondering whether the GVI price was a good one (I was missing something, yes, the debt that the buyers were [...]