Can someone please explain why this arbitrage still exists? After the stock swap, HRG has ~139.2m shares o/s and a price of $6 for a market cap of ~$835m. But after the stock swap HRG owns ~54.4% of SPB, which has ~51.1m shares o/s and a price of $31 for a market cap of $1.58bn. HRG also has ~$125-130m in net cash.
So, HRG is worth (.544 x $1.58bn in SPB + 125m cash) / 139.2m shares = $7.07. Yet it trades for $6, or about a 15% discount.
Can anyone help me figure out why this opportunity still exists even AFTER the stock swap has closed? Aside from the illiquidity of the stocks, it would seem someone would want to short SPB / long HRG and collect the spread.
Falcone has a bevy of legal and tax experts has a enigma plan.Only hope is he takes the little SH along for the ride.Hes a whale so im betting on this team not to shaft us. Thats the sneak job take..Hes working a financing deal very sophsiticated...
Thanks for catching my omission. I'm not sure it matters though. Correct me if I'm wrong, but the $350m debt doesn't affect net cash/debt and the 11% hurdle is easy for Falcone to clear by just selling SPB and buying more HRG. Am I missing something here?