Since the beginning of September, a new euphemism has found its way into Wall Street parlance: ‘recalibration.’ It is a close cousin to the original euphemism, ‘correction.’ In fact, the pair of linguistically neutral terms are often popping up in the same sentence, such as ‘Given the market’s correction, we have recalibrated the deal.’ We gather that’s a lot more sensitive than saying, ‘Look, stocks have gone to hell, so we slashed the deal.’
Whatever the language, we saw two cases of this on Wednesday. Not unexpectedly, Brocade ‘amended’ its offer to buy Foundry, originally inked in late July. (‘Did we say $3bn? We meant $2.6bn.’) And Broadcom took a pair of scissors to its agreement to buy AMD’s digital television unit, cutting 25% from the price.
At least the deals will get done (probably). The same can’t be said for a transaction a banker described for us yesterday over coffee. Working on the sell-side, the banker and his client hammered out an agreement with a strategic acquirer over the summer. Terms called for the buyer to pay about $30m, about $25m of that in cash, the rest in equity. As shares in the would-be buyer ‘corrected,’ the company ‘recalibrated’ the price down to about $20m. The final kicker: the company planned to pay in stock. The would-be target is ‘recalibrating’ its interest in the offer.