Takeover offer comment by sell-side analystThe Globe & Mail reports December 18 that the Haywood Securities analyst has cut the target price from $0.80 to $0.48 and changed the recommendation from "buy" to "tender". it is difficult to follow the logic here. If the stock was a potential double from $0.40 to $0.80 on December 17, why isn't the analyst saying that this merger dramatically undervalues LOU and that shareholders should agitate for a better price? Maybe there is a lock-up agreement which means this is a done deal, but that is no reason to roll over.
in any event, there is an arbitrage opportunity here for a retail investor; A LOU shareholder will get 0.01239 shares of $US-listed VTS currnetly trading at $24.36 = US$0.3018. At a $0.70 Canada/US exchange rate, this worth $0.43 Canadian while LOU is trading at $0.40 - effectively buying VTS at 93 cents on the dollar. Generous yield already on VTS will move to 9.9% after the deal closes. Small consolation, though if LOU is really worth $.80.