Is NGC going to buy out PCGS

RICK15JK · February 19, 2003 5:06AM

IS NGC GOING TO BUY OUT PCGS ????

I've noticed alot of personnel movement lately (speculation) around in the coin grading business

and the latest stock of the entire CU is not that good. Do think maybe NGC may take over PCGS.?????

Rick

Russ · February 19, 2003 5:09AM

Yeah, they're having secret merger talks right now. Hager has already topped NGC's offer, so they've had to go back to the negotiation table.

Russ, NCNE

kieferscoins · February 19, 2003 5:11AM

Seriosuly: No way.

Cameron Kiefer

dorkkarl · February 19, 2003 5:20AM

uh, why would they want to? just to eliminate competition???

K S

paigowjohnny · February 19, 2003 5:30AM

Lookout...smells like a MicroSoft anti-trust trial in the brewing

flaminio · February 19, 2003 6:09AM

<< uh, why would they want to? just to eliminate competition??? >>

Sure, why not? Wouldn't be the first time such a thing has happened in the corporate world...

CLASSICS · February 19, 2003 6:13AM

<< uh, why would they want to? just to eliminate competition???

K S >>

...............if you cant beat them , buy them........sam walton founder of wal-mart

MastaHanky · February 19, 2003 6:16AM

Yeah, I personally think either WalMart or Microsoft will buy PCGS.

satootoko · February 19, 2003 6:41AM

Maybe a bid to buy both of them is behind Ted Turner's recent huge sales of his AOL stock.

Bear · February 19, 2003 7:05AM

I heard that Russ is quietly buying up the stock at 8 cents a share. From my

secret sources, Russ has accumulated almost 1000 shares. I guess by buying control of the

company, Russ will finally get a chance to grade his own 64AH half as the first and only PR-70DC.

Way to go Russ. Old Clank is already preparing a story to commemorate the assention of Russ

to the exaulted position of Emperor of the Board and grading diety of the world.

nwcs · February 19, 2003 7:38AM

Speaking of that, I wonder how the SEGS acquisition is moving along?

FC57Coins · February 19, 2003 7:40AM

Kewl - that means that all my NGC coins will cross over and I'll make a bundle!!

BWAHAHAHAHAHAHAHAHAHAH hack cough cough

Russ · February 19, 2003 8:25AM

You know, that also might solve Laura's client's problem.

Russ, NCNE

dabugler · February 19, 2003 8:39AM

"Is that an original PCGS or a second generation". Slab on!

Anytime big business mixes with hobbies the collectors suffer.

Dog97 · February 19, 2003 8:44AM

I hope so because I really miss Rick.
Rick?
Rick?
Is that you Rick? Have you come back?

Coinosaurus · February 19, 2003 9:14AM

Ya know this is interesting....what's the market cap of CU? It's $20M. Suppose some enterprising collector decided they were gonna buy it out......could they get their dough back by "making" coins arbitrarily after they owned it.....sure, PCGS would lose all credibility after awhile......but could you make back your original investment in the meantime????

In fact, in theory you could buy 51% controlling interest for only $10M and change! The $10M figure just seems really low to me, in terms of the leverage that PCGS has over the overall coin market. I liken the grading services to the Fed - they control the "money" supply and exert very strong influence over the financial markets.....

tradedollarnut · February 19, 2003 10:33AM

Don't think some haven't thought about buying control!

But..... PCGS insiders control the stock. Unless David Hall and Van Simmons and Gordon Wrubel and others decide to sell a significant portion of their holdings, buying control on the open market is not possible. In addition, it's a very thinly traded stock. I think the average volume per day lately has been less than 10,000 shares. A buy order of any magnitude will cause an immediate jump in the price. You could never hope to buy a significant amount of stock at the current level.

PCGS would be a flaming bargain at the current price. However, other divisions are involved also. Something is causing losses and I don't think it's coin grading!

gmarguli · February 19, 2003 3:16PM

Come on. Do you think the government would allow the #1 & #2 companies that probably control 80%+ of the market merge? No way. It would be blocked in a second. NGC could buy CU, but I'm sure they'd be required to sell off PCGS.

RICK15JK · February 20, 2003 4:39AM

Baseball...

Here is one for you...

Rick

EVillageProwler · February 20, 2003 4:46AM

NGC can't buy out PCGS because doing so would give Cameron a myocardio infarction. And, we can't let that happen!

EVP

Russ · February 20, 2003 4:47AM

EVP,

He's young, he'd recover. It's WSM I'm worried about.

Russ, NCNE

EVillageProwler · February 20, 2003 4:52AM

Funny how easily I forget about WSM...

EVP

wallstreetman · February 20, 2003 4:53AM

Greg, the Govt could care less about a Coin Grading Service!

kieferscoins · February 20, 2003 4:53AM

<< NGC can't buy out PCGS because doing so would give Cameron a myocardio infarction. And, we can't let that happen! >>

Now I got to look up what that disease is.

Cameron Kiefer

gmarguli · February 20, 2003 4:54AM

Greg, the Govt could care less about a Coin Grading Service!

That's why the govt went after PCGS in the past?

wallstreetman · February 20, 2003 4:56AM

Russ, dont worry, Im going to live a long time so I can get on your nerves, Im having too much FUN!

wallstreetman · February 20, 2003 4:59AM

They must have owed them some $!

Russ · February 20, 2003 5:08AM

<< Russ, dont worry, Im going to live a long time so I can get on your nerves, Im having too much FUN! >>

Good, I feel better now.

Russ, NCNE

truthteller · February 20, 2003 11:41AM

I wholeheartedly agree with BB on taking PCGS private again. Spin off the dead wood companies of CU and make PCGS a viable company. Unfortunately, I think some stock holders have taken the money and run.

TRUTH

gmarguli · February 20, 2003 12:10PM

Since I was so warmly invited, I will chime in with my comments. Even if NGC wanted to buy PCGS, what would they use to pay for it, free grading certificates?

NGC (and PCGS) both probably "throw off" a lot of free cash. NGC is also supposedly backed by a large well known company.

gmarguli, isn't NGC a private company? I'm not sure the the DOJ has any jurisdiction to stop a merger between private companies. Considering the market caps involved, I'm pretty they could care less anyways.

Yes, NGC is a private company (probably an S Corp). The FTC would have an interest in the two merging. It would be anti-competitive. I looked at the ftc.gov site on mergers and it mentioned nothing that I could find on different rules for private v. public companies.

Mark · February 20, 2003 12:31PM

greg, et. al.:

You are correct, there is no difference between the merger of publically owned companies versus privately owned companies. In either case, if the merger "substantially lessens competition or creates a monopoly" (straight from the Clayton Act) the merger is illegal. I presume that the market shares of PCGS and NGC are large enough that their merger would substantially lessen competition. On other other hand, if, say, SEGS wanted to buy PCGS, that merger might be allowed. SEGS likely has a very low market share, so the combination wouldn't substantially lessen competition. Of course, the idea of SEGS buying PCGS warrents a big

.

An exception to the Clayton Act occurs if one of the firms trying to merge would go bankrupt without a merger. In that case, the government allows firms with large market shares to merge because forbidding the merger and causing one to go bankrupt would, by itself, lessen competition.

I think a more likely outcome of the CU story is that David Hall takes the firm back private by buying the outstanding stock. If so, he would make a pretty penny, selling high and buying low.

Mark

tradedollarnut · February 20, 2003 12:42PM

IMO you are looking at the trees and missing the forest. It would be fairly easy to get gov't approval of a PCGS/NGC merger. By simply not focusing on the coin grading industry but rather the collectible industry as a whole. By showing that Heritage is a much larger player in coin sales and in auctions. By pointing out the fact there are multiple competitors in coin grading and card grading. A rather small portion of CLCT's gross volume is coin grading revenues. A much larger portion is coin sales and auctions.

Besides, I think NGC is too small to even warrant a gov't review of a merger. There's a sales volume that kicks the requirement into place.

Mark · February 20, 2003 1:05PM

TDN:

I agree with you that it's unlikely that the government would be too concerned with a merger in the coin industry, but the government (the FTC, right?) was sufficiently concerned to go after PCGS a few years back. I wasn't collecting at the time, but I admit that I am surprised that the government thought it important enough to force PCGS to sign a consent decree. Of course, the issues there might have been larger than a merger of 2 coin grading companies-I simply do not know. But, my bet is that if there was an attempted merger between PCGS and NGC and if the government took an interest, the government would force either PCGS or NGC to be spun out of the resulting company. (Which is the bigger "if" in the previous sentence, I don't know...) So, as you (TDN) state, I think you are right on the money when you point out that CU is more than PCGS and that the other parts of CU--B&M, DHRC, etc.--don't have any antitrust issues if they merged with NGC.

I still think a more likely outcome is Hall buying up the public stock. Or, possibly TDN buying the company in order to cross his trade dollars????

Mark

oreville · February 20, 2003 1:49PM

<< Or, possibly TDN buying the company in order to cross his trade dollars???? >>

Hmmm....now, I never thought of that either.

Nice PCGS write up on the trade dollar collection TDN!

michael · February 20, 2003 2:45PM

maybe it all depends on the offer......................and the meeting of the minds

sincerely michael

braddick · February 20, 2003 2:49PM

Maybe PCI will just step into the whole shabang and buy them both up.
We'll then have the silver and bronze labels to go with the gold!

MacCoin · February 20, 2003 7:13PM

I don't know about sell out to NCG but I bet you see something happen right off.

Conder101 · February 21, 2003 9:55PM

<< Yeah, I personally think either WalMart or Microsoft will buy PCGS >>

I hope it's Wal-Mart, I'll get another grading service to add to the list.

We'll have PCGS, and SCGS. SAM's Choice Grading Service.

coinut1799 · February 21, 2003 10:26PM

I sincerely doubt that there could ever be a merger of NGC and PCGS. You are talking about David Hall and Mark Salzberg here, two very strong minded individuals. Remember, Hall just recently terminated Dave Bowers from his own company. And despite all the problems, I think a merger of PCGS and NGC would hurt the hobby (in particular the certified coins end), rather than help it.

Is NGC going to buy out PCGS

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