S.A.C. may seek another bidder for EDO

Activist investor S.A.C. Capital Management LLC has decided to try to stir things up at EDO Corp., a supplier of defense electronic systems that agreed in September to be purchased by ITT Corp. for $1.5 billion.
According to a Securities and Exchange Commission filing on Thursday evening, activist fund manager S.A.C. Capital Management, which has a 6.1% EDO stake, reported that it believes the price being offered for the defense systems company may not be enough. Apparently, a slowing deal market coupled with the credit crunch hasn’t led S.A.C. to quietly accept the EDO-ITT deal: “While [S.A.C.] are continuing to review [EDO’s] preliminary proxy statement and are considering the proposed merger transaction in light of the information contained in the [company’s] preliminary proxy statement, [S.A.C.] believe that the merger consideration might be inadequate,” S.A.C. wrote in the filing.
EDO has a $1.2 billion stock market capitalization. According to S.A.C.’s filing, the activist fund’s managers will continue evaluating their investment and they may, “engage in discussions with certain persons, including, without limitation, management or representatives, [EDO’s] board of directors, other shareholders … and other relevant parties, concerning matters with respect to [S.A.C.’s] investment in the common stock, including, without limitation, the terms of the proposed transaction."
According to the filing, S.A.C. also says it may write and respond to letters from EDO’s board or management. In other words, this is just the beginning of the activist’s disruptive efforts.
Despite S.A.C.’s endeavors, EDO and ITT reported that they expect the deal to close sometime early next year. — Ron Orol