Too much Optimism that Deal will Close - 2/3 voteWith the upcoming AC/AIM deal requiring a 2/3 vote, those who vote FOR have an uphill battle. Mittleman must vote his 18.3 percent in favor of the transaction (doubt they would vote this way if not handcuffed to the Board), leaving 48.3 percent votes needed for the purchase transaction to move on to the regulators. 33.3 percent plus one vote AGAINST would tip this deal into the NO category.
In the case of a NO vote, do you think the consortium will let their crown jewel go... or put an offer forward that more or less reflects Aeroplans fair value?
Taking into consideration that a chunk of shareholders will not vote does not change the math. Those voting FOR need to have 40 plus percent more votes (even after Mittleman bros) than those not in favor, to secure the deal. Not saying that the deal won't go through, just not as clear cut as everyone is presuming. There will be some (not much) legacy holders that will vote no, perhaps the 7 percent Burgundy stake may be voted against as their sp is north of $8. and any other pissed off shareholders who think AC is taking AP and AIMIA for a ride.
IMO, the market is irrationally mispricing this company. A NO vote will not cause AC and the consortium to walk, there is a high probability they would come back to the table with a more fruitful offer or issue a tender. We are forgetting that the consortium wants this asset desperately, one of the biggest cash flow generators for TD (who has ponied up over 600 mil for this transaction), CIBC and AC.
To note some previous posts, your math is good on the share price but there is the inlcusion of the accumulated dividends of pref and common that will be paid on deal closing, which is: $50 - 60 mil (30 mil for declared common div from June 2017 and roughly 5 mil a quarter on prefs).