Transactions
Jun. 18, 2002
Making an Offering Look Easy as Child's Play
Gordon Bava, firm co-chairman, led a group of underwriters in their purchase of 4 million shares of Jakks Pacific Inc. for $71.4 million. The group consisted of Bear Stearns & Co. Inc., U.S. Bancorp Piper Jaffray and Advest Inc. Malibu-based Jakks Pacific makes toys that are sold under the brand names Flying Colors, Road Champs, Funnoodles, Remco and Pentech.
Firm: Los Angeles' Manatt Phelps & Phillips
Practice Area: Corporate finance and mergers and acquisitions
Age: 54
Gordon Bava, firm co-chairman, led a group of underwriters in their purchase of 4 million shares of Jakks Pacific Inc. for $71.4 million. The group consisted of Bear Stearns & Co. Inc., U.S. Bancorp Piper Jaffray and Advest Inc. Malibu-based Jakks Pacific makes toys that are sold under the brand names Flying Colors, Road Champs, Funnoodles, Remco and Pentech. Bava talks about the role underwriters play in a public offering.
Jakks sold 3.5 million shares, while other shareholders sold 500,000 shares. Who are the other sellers?
The other shareholders included Jack Friedman, president and chief executive officer, and Steven Berman. Those were the two biggest. It's a fairly common technique for founders or senior managers to retain some equity in their stock.
The shares were sold for $71.4 million, but the company only got about $60 million. Where did the rest of the money go?
The selling stockholders get their price. There's underwriting commissions.
What are the priorities of the underwriters in an offering?
The principal legal concern for underwriters is to ensure that there is a factual basis for statements made in the prospectus and to conduct due diligence and inquiry to ensure that the statements do have factual basis. At the end of the day, the underwriters want to get the deal done; that's how they make money.
What involvement does an underwriter have with a company during an offering?
They help the company oftentimes present themselves in as positive light as possible to capital markets. On the other hand, they also identify risks in making an investment in a company. Ultimately, they are there to problem solve.
Did you have any problems in this deal?
It was relatively smooth and painless. [Jakks Pacific] is all about making kids happy. That sense of whimsy and enjoyment, even though it's a tough business, pervades.
So what are the offices of a toy company like?
They have the most spectacular executive offices I've ever seen. They're on a bluff in Malibu with views of the Pacific Ocean.
Stefanie Knapp
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