Quote:
Originally Posted by Jya-Ning
The market does not seem to believe $15 per share will hold. Or the deal will actually go through.
Jya-Ning
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I think the market came to the exact same conclusion I did yesterday. That conclusion is how can a one resort private company 2 years ago swallow a $750 M whale and then only 15 months later swallow another $500M whale?
Who will be willing to finance a $500M acquisition of a company that is 50% in Residential Real Estate for a 150% premium over stock market cap?
What is the possible out for the investors? Why would this be a strategic acquisition with tremendous cost or revenue synergy? Take common and preferred stock in an already overleveraged company? Or, secure debt with sinking real estate assets?
The financing of this deal is far from assured. Even if it is, I wouldn't want to be the CEO with private equity firms up my tailpipe all the time about my quarterly results and debt convenances that would scare genghis khan. Investors would be foolish not to install their own CFO so that the CEO is handcuffed to the business plan.
That said, this is why they pay the CEOs the big bucks. If they can pull it off, Stephen Cloobeck will be a star. Got to have nerves of steel to try that one.
