Sid, it's also not understanding that the fully diluted and fully costed (exec exit comp) NAV was just over $18 .. not $20. Starting from low $18's and getting mid $17's isn't so bad especially when ARES/ARCC + $ is what we are getting.
Don at this point I am based upon the wording "merger" in the PR. If it is structured as a merger and it's cash + stock, the way it works is that the stock is a tax-free like exchange and the cash goes against your basis. If your basis it used up (is less than the cash received, which is my case), then the "excess basis" must be taken as a CapGain.
This is only referring to the cash from ARCC. The cash from ARES is up in the air. As it's stated, it seem to be coming from ARES directly, so it would simply be a sale I think.
Not sure about the AGNC for MTGE structure at all.
So, so sum up. Pretty sure the ARCC stock will be tax free, the ARCC cash will be reduction in basis, the ARES cash will be taxed gain and the AGNC value is complete unknown.
...$10.06 cash per share PLUS an additional .48185 % ARES stock trade for every 1 ACAS stock owned = $17.40. This give away sale price is like buying a new Cadillac at the price of a used Pinto.
Moral of story ACAS SHAREHOLDERS GOT SCREWED BY MANAGEMENT.
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If you think ARCC will rise, you are better off owning ARCC now and getting 1 for 1 benefit plus the dividend. If ARCC drops you lose less by owning ACAS til the close. In fact, you are net even at ARCC $11.75 not counting the lost dividend.. Below that you lose, not counting the lost dividend. At $10.06 in cash and .483 shares, you have limited exposure to ARCC moves. AT 11.75 you get $5.68 in shares and at 16 you get $7.73 in shares. so a 5.75 point swing only gets you 2.05 either way.
====get real and do the math .453 x 2.00 is a lot less than .453 x 15.00,
as the price go down the share of one suffers less than the share of the other.====
That's the way it works if there are no limits included in the price. And I don't see any limits included in the deal.
But try to be optimistic---If the ARCC price goes up to $50 you will get .453 X $50.
get real and do the math .453 x 2.00 is a lot less than .453 x 15.00,
as the price go down the share of one suffers less than the share of the other.
ACAS said "As of March 31, 2016, net asset value ("NAV") per share was $20.14" but are now selling the company for $6.41 plus .483 shares ARCC (total $14.95). Good luck on seeing the $2.45 for the sale of American Capital Mortgage Management. Even counting the $2.45 its 13% below the much hyped net asset value of $20.14.
Are you new to investing or just completely uninformed generally? Arcc could be at 2 and the cost to them would not change. It is cash and shares of ARCC. The only thing that changes is the value to ACAS holders.
I think the more valid arguments I saw on this was economies of scale
that they'll achieve by combining activities and talent for the benefit of
both mortgage and agency and cutting out redundancies.
" they seem to be really happy with the deal and AGNC rose nicely on the news today."
They will be paying in house salaries versus a fee to ACAM.
I did the calculation late afternoon. Looks like if you assume closing by YE and collecting 3 ARCC dividends prior you come out 1.5% ahead by holding ACAS. difference would be if ARCC materially appreciates before closing. ACAS only participates in the appreciation at a .43% rate.
Also compared switching to another BDC comes out slightly less attractive. Decided best to hold through close for now.
I believe in the Allied transaction they came back and sweetened the deal with a special dividend to Allied holders. Not holding my breath for that.
I noticed that Ares capital hit it's low about 12 pm EDT then mostly moved higher.
It finished 31 cents above it's low for the day at noon, but ACAS essentially
flat-lined for the entire time that Ares was climbing.
I think it's curious that ACAS has hardly responded to the deal, even as trading
volume skyrocketed. NMB and I have been discussing the fact that the $1.20 cash
that Ares's parent company (symbol ARES vs the ARCC symbol that the acquiring company
uses) is kicking in is getting virtually Zero press... so perhaps that's what's holding ACAS
Still, any article mentioning the full economic value of the deal ($17.40 based on ARCC's
closing price Friday) is taking that $1.20 into account, and that $17.40 value, plus ARCC's
rising stock price all afternoon STILL failed to move ACAS more than a dime above
At this juncture, I can only assume that people are doubting whether or not this deal
will go through... or maybe just that ACAS appears to have let American Capital Agency
get too sweet of a deal...
... they seem to be really happy with the deal and AGNC rose nicely on the news today.