Neither Cinven Nor Blackstone Shareholders Matter
Why you may ask. Well, as for Cinven, they only own about 14% of Concordia's outstanding shares. Cinven alone cannot deliver enough shares in a lock-up agreement with Blackstone for Blackstone to feel confident about succeeding with a hostile bid. Blackstone would have to seek out numerous institutional shareholders with differing views of value to get to a percentage of locked-up shares for it to feel confident about taking an end run around management, As a result, CXR Management and Board are in the drivers seat in negotiating a deal with any potential suitor. No friendly deal gets done without their full support.
As for Blackstone shareholders, all they care about is the management fees Blackstone generates, which underpins Blackstone's share price. They are not focussed on the premium paid for an asset brought under the group's management. Limited partners who invest in their various funds care about the returns an investment will likely make over the long term. In such a scenario, Blackstone has all the flexibility it needs to pay a price CXR Management and Board feel is fair value and which will still meet their target internal rates of returns for investments, Does anyone here really think that in such a scenario CXR management and Board would negotiate and recommend a deal for less than USD $75?
I personally have 35 to 40% of my portfolio invested in CXR already. Well beyond any allocation an investment advisor would recommend. Despite that, I will actually be investing some more funds this week if a deal is not announced before then. Do not listen to the noise coming from the shorts who need the SP to stay depressed to avoid losing their shorts to cover. This is a rare opportunity. Do not seize it at your own peril!!!