Good News or Bad News First? (And Some Bear Links)
The good, for continuity. I spent about an hour chatting over IM with Felix Salmon and Equity Private (with a quick guest appearance by DealBreaker’s Bess Levin). It was quite an interesting time, to say the least!
The bad, now. They actually killed my post ideas. Yes, you heard me right, killed them dead. Well, it was a bit conspiratorial. I had conjectured that JPM’s option to purchase 20% of Bear at $2.00 and their “locking up” Bear’s building meant that they were happy to have someone else come in higher (earn the difference between the higher bid and $2 on 20% of Bear’s shares, and get the building). Alas, the fly in the ointment? Felix pointed out Section 6.9 of the merger agreement (Tidbit: Section 3.2 … “please provide”). I still believe that Bear’s advisory and Leveraged Finance business have value to, say, a P.E. buyer.
Well, even if it wasn’t likely, the markets must be assuming that a higher bid was likely, right? To that end, I had a post all ready! Bear closed at $5.91 today. If you assume that premium is due to a higher price, then there’s a 50/50 chance Bear get’s bought at $9.50 ($5.91 – $2.00 is approx 50% * ($9.50 – $2.00), essentially assuming the share price premium is a probability times a premium from a higher priced deal). I had all the numbers crunched. Alas, Felix has quashed that one too. I’m not 100% sure I buy the “debt holders are buying the stock” argument, but my other theories are all killed.
Unfortunately, then, I have no clever post. Although, here is one question answered.