Not sure why the market doesn't realize the arbitrage situation that exists here, since after the stock exchance with SPB, each share of HRG represents $7 in stock and cash. The only thing complicating things is the 8K announcement that they'll also be acquiring the Old Mutual U.S. Life Insurance Company next year for $350m instead of the Harbinger Capital hedge fund, which had an option to buy it, so I can't figure out if the manager Falcone is using HRG as a holding company for his mistakes or his best ideas.
They legitimately like Spectrum Brands. I think some discount is warranted because Falcone has just demonstrated that he's willing to force you to sell him $1 for $.85, but the level of the discount seems extreme.
<<<I think some discount is warranted because Falcone has just demonstrated that he's willing to force you to sell him $1 for $.85, but the level of the discount seems extreme.>>> -------------------------------------------------------------
Finance is not my area of expertise but it sounded like the share exchange was neutral. Are you basing the discount on the fact that HRG's market cap was less than cash and therefore more undervalued than SPB was when the share exchange was calculated?
I'm not sure how they will be paying for the Insurance companies but with the all stock deal for SPB Falcone still owns it through HRG. I took a flier on a handful of HRG shares betting that Falcone wants to build it's value up as he is still the majority owner. We do have independent board members who are supposed to be looking out for minority shareholders interest reviewing these deals although I don't know how independent they really are.
SPB looks like it could be a decent deal for us if managment projections for fcf and paying down debt over the next couple of years pans out. It wouldn't be a company that I'd normally get excited about but U.S. consumer seems to be more value oriented these days and I think value work well in emerging markets as well so I'm warming up to SPB.