MMI Discloses 9.4% Stake in DJO - Is It Now a Buyout Target?

In a 13D filing on DJO Incorporated (NYSE: DJO), MMI Investments, L.P. disclosed a 9.4% stake (2.2 million shares) in the company. The firm did not show a stake in DJO at the quarter ended March 31, 2007.

The firm filed notification under the Hart Scott Rodino Antitrust Improvements Act to acquire 10% or more the company. The firm does not plans to raise its stake above 14.9%.

We recently published an article discussing how many of MMI Investments' portfolio stocks have been, or are in the process of being, acquired. Link to "The Buyout Touch" report

While it is likely a foolish strategy to bet on a buyout of DJO just because MMI holds a stake, the recent track record of the fund can not be ignored. Of their past 6 positions, excluding today's DJO disclosure, 4 have been acquired and one other is likely exploring that possibility.

From the filing: "In order to retain its flexibility to determine to increase MMI Investments’ holdings of Common Stock to more than 10% of the outstanding Common Stock of the Issuer, MMI Investments intends to notify the Issuer of its intention to file in the near future a Notification and Report Form under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act") and request early termination of the waiting period pursuant to the HSR Act. Upon such filing, the filing of the Issuer’s responsive filing, and the expiration or early termination of the waiting period, the Reporting Persons would be permitted under the HSR Act to purchase additional shares of Common Stock such that the Reporting Persons would hold up to $500 million (subject to adjustment from time to time in accordance with the HSR Act, with the current threshold being $597.9 million) in total market value of Common Stock at the time of such purchase. However, MMI Investments does not currently intend to purchase Common Stock of the Issuer if, as a result of the purchase, it would own more than 14.9% of the outstanding Common Stock (which would have represented a market value of approximately $137 million based on the number of shares outstanding at May 8, 2007 and the closing price on June 21, 2007)."