Tuesday, January 22, 2008

Leucadia Ups Stake in AmeriCredit to Almost 20%

Leucadia (LUK) commit to purchase almost 20% of AmeriCredit (ACF) shares in an SEC filing Tuesday night.

From the filing:
"As of the close of business on the date of this Statement, the
Reporting Persons (Leucadia and its owned entities) may be deemed to beneficially own collectively an aggregate of 22,159,300 shares of Common Stock, representing approximately 19.4% of the shares of Common Stock presently outstanding. All percentages in this Item 5 are based on 114,162,314 shares of Common Stock outstanding as of October 31, 2007, as set forth in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007."

What does Leucadia think AmeriCredit may be worth? Consider this nugget:

"Baldwin (Leucadia subsidiary) and Jefferies (broker)have entered into a share forward transaction agreement, dated January 11, 2008, pursuant to which Baldwin will acquire an aggregate of 11,316,200 shares of Common Stock at a price of $12.90 per share on February 25, 2008. Baldwin paid $72,989,490 to Jefferies on January 11, 2008 as a prepayment and will pay an additional $72,989,490 to Jefferies on settlement
of the share forward transaction."

On 1/11 AmerCredit opened at $10.88 and close at $11.99. Leucadia, one of the best value investing firms out there are willing to buy shares at a premium to the market to be able to acquire enough fast enough. It should be noted that the 11.3 million shares are over 2X the daily volume so it would have taken Leucadia significantly longer to accomplish this on the open market. One has to conclude Leucadia has a significantly higher valuation than the $10.28 share trade at today.

Leucadia also used my favorite "acquisition" option strategy, the naked put:

"On December 13, 2007 and December 17, 2007, RCG Sextant and RCG
Enterprise (Leucadia subsidiaries) sold exchange-traded put options underlying Common Stock, pursuant to which they are obligated to purchase, but have no right to acquire, an aggregate of 261,600 shares of Common Stock and 38,400 shares of Common Stock, respectively, at a price of $7.50 per share. The put options are exercisable by their holders at any time prior to their expiration on May 17, 2008. RCG Sextant
and RCG Enterprise received $1.15 for each share of Common Stock covered by the
put options."

AmeriCredit deserves a much closer look...

Disclosure ("none" means no position): None

Todd Sullivan's- ValuePlays

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