CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:Why buy SPB at the moment, when you can buy CUS and convert

[pierrelebel]

"Why buy SPB at the moment?"  Currently CUS trades at a (approximate) discount of 10% based on the conversion factor.  So it may appear to make sense to buy CUS instead of SPB.

However, there is about nine months to go before the deal closes.  Is it worth holding for 1% discount a month.

Then by buying CUS instead of SPB you lose on the generous monthly dividend paid by SPB (about 6.7% annual).

Also there are two risks:
1) shares of SPB go down, dragging CUS in the process
2) the deal does not go through for whatever reason and shares of CUS tank.

All in all, not worth it in my opinion unless you strongly believe in the possibility someone else would come with a stronger bid (and willing to pay a $25 million cancellation fee). I do not see it.