Investors haven’t had much to smile about lately. This one merits a broad grin. A company calling itself Toks Inc. has filed papers with the Securities and Exchange Commission announcing plans to take over General Motors, General Electric, AT&T, Hughes Electronics, AT&T Wireless, AOL Time Warner and Marriot International – for roughly $2 trillion in “Toks” stock. Evidently the people – make that person – at Toks have a healthy sense of humor. They must, because they certainly don’t have $2 trillion – or 2 cents as best we can determine.
The October 9th filings by Toks propose that the acquisitions “could create up to additional $300 billion in annual revenues, even after liquidation of assets or spin-offs recommended by regulators and initiated by the Company.” And, as if it weren’t sufficient to capture control of the nation’s leading auto manufacturer, electricity provider, telecommunications company, entertainment conglomerate and hotel chain, the “business plan will include aggressive expansion of Toks Inc. into other industry sectors and its subsidiaries.” Why not think big, bigger, biggest, or as the Toks papers so eloquently put it:
The potential to make Toks Inc. the largest U.S public entity. Or the largest public entity in the world. Expansion will cover all corners of the globe. Our Company listing will cover different exchanges around the globe to gain access to their capital markets. This will include developing countries as well.
Or, to borrow a phrase, today GM (et al), tomorrow the world.
Money Toks
Toks doesn’t own any stock in these companies, and the Company does not appear to have any cash just yet. So how does Toks plan to acquire these various giant corporations? It plans to exchange $2 trillion worth of Toks stock for shares of the other businesses. Toks says that shareholders of the target companies will get to exchange 12 to 36 shares of their current holdings for one share of Toks common stock. Toks doesn’t indicate how it arrived at the exchange ratios but, right now at least, it is planning to issue that single share of Toks common stock in exchange for 12 shares of General Motors, 15 shares of General Electric, 16 shares of AOL Time Warner, 36 shares of AT&T Wireless, or 16 shares of Marriott International. But the Company will not be soliciting proxies because, in Tok’s words “[t]he Company is not interested in wasting resources to seek proxy votes.” Apparently it does not draw the line at wasting “resources” to make frivolous SEC filings.What does Toks plan to do if shareholders don’t rush to make that swap? The Company states it “will take its securities to others if those we first seek rejected our offer.” That means we can probably count on a second wave of take-over bids.
The SEC filings suggest that Toks is already thinking about the post-takeover composition of its acquisitions. Some divisions will be consolidated, while others will be sold or closed. And Toks isn’t certain what will become of the existing management teams, conceding that it is “inevitable” that “some executives will be let go.” Considering the likelihood of this scenario, maybe they shouldn’t be reaching for their golden parachutes just yet.
Of course, Toks may be planning to replace management at these leading corporations with its own “team,” which presently consists of the Company’s founder, Chairman of the Board, Chief Executive Officer, and sole stockholder, Ade O. Ogunjobi. The 41 year old Mr. Ogunjobi, a naturalized U.S. citizen who describes himself as an “alter boy,” says he “abandoned” his undergraduate education “to concentrate in raising capital to finance Toks.”
That could take a lot of concentration on his part. In September, Toks filed an amended Form SB-2 Registration Statement for the Initial Public Offering of 20 shares of common stock at $5,000 a share. Toks now indicates that Mr. Ogunjobi plans to buy all 20 shares once (make that if) that registration statement is declared effective by the SEC. The Company claims that it plans to ask its “main bank” to form a syndicate that will raise $10 billion, which will be used principally for working capital, to pay for the tender offer filings, and to start production of “100 feature films.”
No such banking relationship appears to exist, although Toks claims it has made “initial contact” with various people employed by the Bank of America, who seem to be waiting for additional information from the Company before they respond to the request for $1 billion. What do you suppose their answer will be?
An “Effective” Offering
Toks claims that it received, and responded to, SEC comments on its proposed Registration Statement on October 4th. The Company also says it asked the SEC to declare the Registration Statement effective within 30 days. So, unless the Company withdraws that request, or the SEC issues a “stop order,” those 20 shares of Toks could be registered by early November. In the meantime, regulators are reportedly looking into the offering and those bizarre tender offers.One final thought. Just in case Toks does go public, maybe the people running GE, GM, and those other takeover targets, will want to buy the 20 shares – and take over Toks instead. That way Mr. Ogunjobi would have the time, and the money, to finish that undergraduate program.
IF YOU HAVE QUESTIONS OR COMMENTS FOR STOCKPATROL.COM, CONTACT US AT editor@stockpatrol.com