Why not bid on market? Why not $16?? Some thoughts.Because that would bid up the price. Before long Jimmy would be buying for $20, $25 per share...
Take-outs are a one price, one size fits all. This also handles the hold outs. If the majority vote, all lose their shares for the agreed upon price. So no holdouts asking for $50/share that way.
Jimmy wins either way -- he gets the company cheap in Plan A, or in PLan B someone else comes along with a huge offer and wakes up the value of the company which he owns 55% of,
The interesting thing will be the knock on effects for other undervalued lumber co's like IFP, CFF, and to some degree WFT (they are the closest to fair value of the lot).
Someone mentioned the market not hitting $16. Agree -- wierd. It's a MINIMUM of $16. I'd say it should be:
50% chance of $16
25% chance of $20
25% chance of $24*
The weighted average of this, above, is $19/share. So that's what I'm OK with going to -- certainly not this $15.25 level which is too low.
*Why $24? Assuming this drags out a few months (easy w/ lawyers), AND lumber turns a corner -- and IFP and WFT go up 50%. Super easy in a few months if we were back to $400 lumber. And a drop of 25% needs 50% up to recover as we know. So, assume that in the fall when it's decision time and everyone else is up 50%. That eats away Jimmy's 50% premium. So we need $8.80 * 1.50 = $13.20. --> we need a 80% premium on $13.20, not $8.80. That takes us to $24/share.