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- Right way to think about / structure arbitrage of Pan American Silver Corp. acquisition of Tahoe Resources Inc.?
- Jeremy Grantham, GMO Discusses Sustainable Investment
- $SPY Short Thesis
- Institutional Investor Profile on Eddie Lampert
| Posted: 08 Dec 2018 12:50 PM PST |
| Posted: 08 Dec 2018 08:26 PM PST Question Trying to do some basic analysis of a merger situation. Steps are:
Facts Pan American Silver Corp. (NASDAQ: PAAS) (TSX: PAAS) ("Pan American") or the "Company") and Tahoe Resources Inc. (NYSE:TAHO) (TSX:THO) ("Tahoe") today announced that they have entered into a definitive agreement for Pan American to acquire all of the outstanding shares of Tahoe pursuant to a plan of arrangement (the "Transaction"), creating the world's premier silver mining company. Shareholders of Tahoe will be entitled to elect to receive common shares of Pan American and/or cash in exchange for their shares of Tahoe. Additional consideration will be in the form of the right to a contingent payment in common shares of Pan American tied to the restart of the Escobal mine in Guatemala. ... Pursuant to the Arrangement, Tahoe shareholders may elect to receive US$3.40 in cash or 0.2403 Pan American shares for each Tahoe share, subject in each case to pro-ration based on a maximum cash consideration of US$275 million and a maximum number of Pan American shares issued of 56.0 million, totaling US$1,067 million (the "Base Purchase Price"). The Base Purchase Price represents a premium of 34.9% to Tahoe's volume weighted average price ("VWAP") for the 20-day period ending on November 13, 2018. In addition, Tahoe shareholders will receive contingent consideration in the form of contingent value rights ("CVRs"), that will be exchanged for 0.0497 Pan American shares for each Tahoe share, currently valued at US$221 million, and payable upon first commercial shipment of concentrate following restart of operations at the Escobal mine (the "Contingent Purchase Price"). The CVRs will be transferable and have a term of 10 years. The total consideration, including the Base Purchase Price and the Contingent Purchase Price, is US$4.10 per share representing a premium of 62.8% to Tahoe's VWAP for the 20-day period ending on November 13, 2018. (1) Evaluation Criteria [not asking on these criteria but included for completeness] To evaluate arbitrage situations you must answer four questions:
Additional merger checklist items:
(2) Estimated Return Acquirer: Pan American Silver Corp. (NASDQ:PAAS / TSX: PAAS)
Acquiree: Tahoe Resources Inc. (NYSE:TAHO / TSX: THO)
Assuming maximum cash consideration and satisfaction of CVR: Cash: $0.88 [$275 million / 312 million] Stock: $2.54 [($1,067 million - $275 million) / 312 million] CVR: $0.69 [$13.84 x 0.0497] Total proceeds: $4.11 Simple arbitrage model (ignoring trading fees): Long: TAHO
Short: PAAS
tl; dr: Is this the right way to think about / structure a potential arbitrage trade? [link] [comments]  |
| Jeremy Grantham, GMO Discusses Sustainable Investment Posted: 09 Dec 2018 04:14 AM PST |
| Posted: 09 Dec 2018 03:16 AM PST Description I am recommending a short of the S&P 500 ETF $SPY. The short thesis is based purely on my assessment of the recently public SDNY filings and subsequent guilty plea of Michael Cohen. The price target is based on quantitative data from previous impeachments to materialize the gravity of the situation. Leaked Documents https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rBt4_CsiaaLk/v0 (Bloomberg) Page 4, paragraph C This excerpt from the December 7, 2018 Michael Cohen filing implicates the Trump administration, if not trump himself, in obstruction of justice. I understand this paragraph is an argument against Michael Cohen's breach of plea, this is not important. What is important are two sentences presented as fact 1) Kilimnik's participation in the count two of superseding information (aka Konstantin Kilimnik gave information to Cohen) and 2) Cohen's contact with the Administration. If we have learned anything from Watergate this paragraph, alone, is grounds for an impeachment trial(though may not prove the guilt.) When the House gains Democratic majority in 2019, impeachment proceedings will begin, as it gives political leverage to the impeaching party. Whether the proceeding is fruitful does not matter, the uncertainty is enough to send the market into turmoil. Price Target I recommend a $222 price target, down 18% from Friday's news. The target is based on a simple average of S&P 500 data $3,877 to $3,037(Nixon July-Nov, 1974) & $14,102 to 12,124 (Clinton Apr-Sept, 1998). I do admit the price target is fairly arbitrary and could drop even further. I do not, however, see losses below 18% given the market's volatility. Catalyst *Impending impeachment of the President *Market over-reaction to uncertainty [link] [comments]  |
| Institutional Investor Profile on Eddie Lampert Posted: 08 Dec 2018 04:05 AM PST |
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