CC,
The issue as to whether BAY is better alone or as part of PAA is a complicated one. It depends upon various assumptions, further complicated by this new amended deal, in which the warrants are kind of a wildcard. (The warrants add to the leverage of the deal to the PAA stock price, but they also increase the risk.)
I think the price of silver is the primary value determinant. One could argue as to whether the combination of BAY and PAA is a good one at current silver prices, or lower silver prices.
However, in my opinion, there simply is very little argument that if silver prices rise, even modestly, BAY stockholders with a stand-alone BAY would do much better than having the BAY/PAA combination. And if silver sustains a climb above $6+, the value of a stand-alone BAY will far exceed the value BAY shareholders will receive as part of BAY/PAA.
Most silver shareholders expect silver to rise in the future; otherwise, why would they hold shares in silver companies, which has done so poorly in the past?
Every deal has a winner and a loser. I think that time will prove that BAY sold at far too low of a silver price.
DB |
