I don't buy the arb theory on TBL price action. VFC paid over 2.85 times revenues for TBL this morning. That is a big premium.
I believe that VFC overpaid. If VFC would have held firm they could have had TBL for $ 39-$ 40. VFC overspent by $150-200 million. TBL just reported the first of bad earnings recently which shows their management can't run a golden brand. TBL is in a position of weakness. Who will bid for TBL against VFC ? Columbia ? Wolverine ? Nike ? Adidas ? All of these firms have bigger issues running their primary businesses. The TBL deal for VFC is all about additional emerging markets growth exposure. To be profitable VFC should cut out the TBL management that has not delivered profits and simply insert the brand into its existing EM distribution system. This will increase gross margins for VFC. The only value VFC got for TBL was the brand, not the business. TBL earnings will be worst next quarter, and the industry knows it.
Although VFC funded its offer via the low corporate paper market, $ 43 per share, the rest of the market knows, was a gift to TBL managers, not VFC stockholders.