First Eagle Investment Management, LLC Now Owns 866,871 Shares of NGA

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In a Form 13D filing released by the SEC earlier today, First Eagle Investment Management, LLC announced that they had acquired a 5.22% stake of North American Galvanizing and Coating, Inc.

According to the filing, April 26th, 2010 was the date that required the filing of the Form 13D.

Why did First Eagle Investment Management, LLC purchase these shares? Straight from the 13D:

"The Reporting Person acquired the Shares for investment purposes in the ordinary course of its business pursuant to investment strategies, including risk arbitrage, because it believed that the Shares, when purchased, were undervalued and represented an attractive investment opportunity."

What makes this transaction interesting is that First Eagle started to accumulate their position the very same day that AZZ Incorporated announced an all-cash offer for NGA in a transaction worth just over $125 million. This works out to $7.50 per share.

Now, almost all of First Eagle's purchases of NGA cost MORE than $7.50. Take a look at their transaction history for NGA over the past 60 days:

April 1st - purchased 100,000 shares @ $7.46
April 5th - purchased 150,000 shares @ $7.47
April 6th - purchased 23,146 shares @ $7.50
April 7th - purchased 32,000 shares @ $7.51
April 8th - purchased 113,454 shares @ $7.52
April 9th - purchased 12,303 shares @ $7.52
April 12th - purchased 210,842 shares @ $7.59
April 13th - purchased 121,950 shares @ $7.56
April 14th - purchased 2,000 shares @ $7.56
April 16th - purchased 18,349 shares @ $7.59
April 21st - purchased 300 shares @ $7.55
April 22nd - purchased 21,927 shares @ $7.57
April 23rd - purchased 16,871 shares @ $7.57
April 26th - purchased 43,729 shares @ $7.55

It's pretty obvious that First Eagle's average price is above the $7.50 cash offer.

A number of law firms have announced "investigations" into the all-cash offer by AZZ Incorporated. These laws firms are investigating whether or not the proposed transaction provides "adequate value to the Company's shareholders."

Clearly First Eagle Investment Management, LLC doesn't believe that the transaction is providing adequate value.

The stock is currently trading at $7.49.

As of 12/31/2009, one of the 102 funds that we track in our database owned NGA shares:

Whitebox Advisors LLC - 271,496 shares

First Eagle Investment Management, LLC recently acquired a sizable stake in TUTR, in a situation very similar to this one. Private equity firm Thomas Bravo announced an all-cash deal @ $5.60 per share for TUTR, but First Eagle acquired their stake after the deal was announced, at prices higher than $5.60.

It will be interesting to see how both situations turn out. It should be noted that First Eagle filed a 13D filing for their NGA stake, meaning that they may be looking to "exert control".

Source: First Eagle Investment Management Form 13D Filing for NGA

Source: Davemanuel.com NGA Quote

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