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Strategies & Market Trends : Ride the Tiger with CD
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To: Terry Maloney who wrote (240140)2/5/2016 5:28:38 PM
From: stuffbug  Read Replies (1) of 313057
 
It is important to consider the nuances of an all paper deal.
In a paper deal, the buyer and seller are not strictly negotiating a price per se.
They are really negotiating what percentage of the merged company will be owned by each of the two original companies.
My back of the envelope, ballpark calculations indicate that, at today's closing prices, a one for six ($1.95) offer from Tahoe would result in LSG owning about 29% of the merged company after consideration is given to the conversion of the outstanding debentures.
I could be slightly off because I assumed all 20 million outstanding options held by LSG employees would be exercised (however, only 11.5 million were exercisable as of Sept 30, 2015).

Prior to Otto's blurb, Tahoe was likely hoping to scoop up Lakeshore for 25% equity in the merged company.
They will now be lucky to complete the transaction at less than 30%.
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