23 days left for the definitive buyout agreement to be signeHere is an interesting piece of information, when NBLY announced the signing of the go-private deal with PCP, the yield on the Canadian 10 year government bond was 4.15% (
https://www.barrons.com/market-data/bonds/tmbmkca-10y?countrycode=bx) today, the yield stand at 4.08%, which means the outlook for long term interest rates has improved since the deal was announced. Likewise for the 5 year, which declined from 4.34% the day the deal was announced to 4.25% today. Meanwhile the 2 year has hardly changed trading at 4.9% on October 3
rd and 4.91% today. Thus, if anything the outlook for interest rates longer term is more constructive, this is a positive development for a partially debt funded deal.
The point of the above is that nothing has changed from a macro standpoint to render the deal less favourable. And yet the discount to the offer price has doubled from 7% to 15% today within two weeks, on low volume, and no major piece of news. The funny thing on August 1
st after the strong Q2 earning report NBLY traded at a higher price than today’s price on strong volume (closing that day at $17.68). And yet, with $20.5 signed letter of intent from a credible buyer, the stock is trading at
a lower price.
Next week, NBLY will likely report another strong quarter as the initiatives introduced by the new management team start to show more meaningfully in the results. And shortly after that, we are likely going to see a news release stating that NBLY has signed a definitive buyout agreement with PCP. The market has missed the possibility of the buyout (something I highlighted days before the deal was announced) and now yet again those selling are missing what’s right before their eyes.