I was listening to the song California Dreamin on the way to the office this fine AM. It made be think of all those out of the money call buyers. No, SPG is not going to save your position and keep dreaming.
the process you describe to circumvent the antitrust issues will take a long time and produce additional uncertainties. the court, ggp, and BFP are not gonna be audiences to that IMO.
i have different views and i am afraid i will not be swayed in this case. but i respect your (and others) points of views and enjoy reading them.
i call truce - and work is piling up. we will eventually see what happens. have a tremendous day.
true, there is no certainty and FTC may eventually approve. but for practical matters, uncertainty in itself is a very strong argument and the mere possibility of FTC rejection severely cripples SPG's chances.
And yes, for this reason simon has very little chances. A reasoning person would therefore say that simon has little reason to participate farther. But simon has proven to be an unpredictable fellow and therefore will likely resubmit a bid.
Well, you assume that any (again, hypothetical) deal will get rejected by the FTC. I dont think that is the case at all. No one knows what the FTC will rule. You can make an argument that there is no issue at all since retail is so diverse, etc, etc equally as well as the argument that this would give SPG too much leverage over retailers. You can have an opinion as to which will happen, but I dont think it would at all be a certainty.
Just look at the share price each time SPG bid - it went up, until GGP made known they were going to reject it in favor of the BAM deal. Its not like the FTC issue just came up - in fact, is now less of an issue.
SPG now has no leverage with GGP, so unless it makes a legitimate offer (and it must know what GGP mgmt considers legit since GGP did supposedly make a counter-offer to SPG that was rejected), I don't think it will even be back. I would just as soon prefer mgmt to take a few weeks to look around to see if there is anything better than the BAM deal in terms of recap bids, then close on the current deal ASAP to get things moving along.
What you say is true.
But this is a side lobe of the main argument, which has not been spelled out in words, but implied. This is the assertion that future bids by SPG is a means to a higher ggp share price.
since simon's offer is unlikely to pass FTC scrutiny, we can't hang a hat on it. any share price increase at the hands of a new offer will eventually collapse when it becomes clear that SPG bid will be rejected.
Also GGP cannot leverage a new SPG offer to increase the BFP bid because they will refuse on the basis of uncertainty related to antitrust issue.
Therefore Simon is done as a practical matter.
Great explanation arb!
To add to the summary (IMHO): SPG is waiting to see if a 3rd player enters the game (one that makes a run at the whole and not the pieces - although either should stir things up). No sense in SPG showing a blowout bid until others are out or POR is due. That's when we may see a UBS or equity swap surface - when GGP has to use it. GGP playing their aces close. Either way, very big catalysts on or before June 2!
Once Oakwood is done (5/20) things accelerate.
"Mr. Nolan would testify that the warrants are reasonable given the nine month commitment of capital that is being made by Brookfield, Fairholme and Pershing. Mr. Nolan would attest that nine months is an extraordinary period of time to commit capital to a transaction that permits General Growth to replace all or part of the capital with an offer from another bidder."
The BFP deal provides the certainty that SPG needs in order to bid again and "see" if FTC will approve. GGP can no longer immediately and outright reject an offer of "substance" from SPG. The BAM deal eliminates the "guessing" of whether FTC will or will not approve. A substantial offer from SPG if not approved or given serious consideration will end up dragging out the GGP emergence plan and possibly land this back in front of Gropper or possibly end up with shareholder lawsuits.