I view the lack of an announcement as encouraging. It means the parties are allowing LINE stock to recover. That could be because LINE has refused to negotiate the deal, but BRY doesn't want to walk away, so they have no choice other than to hope the stock price gap narrows to support the current offer. Or, it could be because LINE has told BRY that they are open to sweetening the deal if the stock price gap doesn't close in the next few days or couple of weeks.
BRY management is highly motivated to get this done. They checked out mentally long ago. They have emotionally moved on, but are being held hostage by the process. They won't take a really bad deal, but they will give the deal every chance to come together. Therefore, I believe the chance of the deal being called off Wednesday is near zero.
My guess is we have a 50 percent chance of hearing the deal is done at some agreed to ratio on Wednesday (higher chance if LNCO stock climbs Monday and Tuesday). And, we have a 50 percent chance of hearing that both parties remain committed to the deal and expect to provide further information in the coming days or couple of weeks (allowing LNCO stock further time to recover). I don't see it dragging on longer than a couple of weeks though. Just my guess.
I suspect BRY is up because there are people betting on a higher bid and LNCO hasn't covered the gap because people think they may be agreeing to additional dilution as well as people just waiting now for Wednesday. But, if the bid stays 1.25X, then, we should see LNCO move up (less dilution than currently being expected at a higher bid) and BRY come down (no higher bid coming).
Now, can they agree to pursue a vote with that kind of imbalance. If BRY management really wants the deal and LINE is saying 1.25X or nothing, then, they must choose between seeing how things play out or walking away. And, perhaps the middle ground is a somewhat higher bid, but not a lot, so BRY management can save face moving forward, but LINE not overpay.
The gap will take care of itself once the final price of the deal is announced. And, highly unlikely shareholders will vote against BRY management, even if a gap remains. In fact, I don't recall a deal ever failing to be completed because shareholders voted it down.
Still, the negotiation could be ongoing and not complete. LINE could be sticking to their guns on the price and BRY could be saying it must be higher, or they will terminate. I would guess all that will be resolved by Wednesday, if not already, but maybe not. What's going on behind the scenes is truly anybody's guess at this point, but my guess is they both want this deal done and it will get done at the current price or some other. GL either way.
I would think most analysts will wait for the Wednesday call to see what management has to say before commenting. Yet, there always seems to be those one or two guys who just can't wait for the facts before publishing an opinion.
I must admit to sharing the question as to whether the inquiry is over and hopeful the Company can clarify this point next week (though they truly may not know either). However, even if not, I think based on the changes to the S-4/A, the most the SEC might do is force LINE to restate its prior year financials relating to put hedges and, if so, it would have no effect on the distribution (so I don't care if they do, though prefer they not).
Either way, I would be surprised if the BRY deal isn't completed at this point. I think LINE has a much stronger hand to play than people give them credit for and BRY management wants this deal as badly as they do. As such, one way LINE could be moving is to simply tell BRY to get on board with the deal or terminate it, but it's not changing. If this is the message, the BRY stock will come in some to reflect that the higher bid isn't coming.
Alternatively, LINE could up the bid, but that doesn't assure the stock prices will come together to support shareholder approval any more than not raising the bid assures it. The only reason to raise the bid is if they truly believe BRY will walk if they don't. While I don't think BRY will walk, maybe they do and they are in a much better position than me to make that call.
No doubt the stock is suppressed by the SEC overhang and various thoughts on the state of the BRY deal, but those are separate issues from the distribution. Whatever the price of the stock is at any given time reflects a variety of things and one of the things it already reflects is the future value of the distributions discounted.
I am a LINE supporter and hold a substantial position, but I wouldn't want anyone to mistakenly believe the true NPV for the company is anywhere near $70 today. Even the most optimistic analysts plug their value in the high-$30's and may move those up to the low-to-mid $40's in the coming days, though they are likely to wait until after next Wednesday call to chime in.
The NPV of the future distributions should already be reflected in the price of the stock, discounted based on inflation and the uncertainty associated with them occurring. As such, the analysis while well-intentioned, double counts the value of the distributions.
I don't plan to sell until it becomes clear the business model of acquiring companies and raising the distribution is no longer workable, or until I find out that I owe too many state taxes in CA or elsewhere that the tax advantages are not what they appear. Until then, like you, I plan to enjoy the monthly, tax-advantaged distributions.
I will be anxious to hear on the call whether the SEC inquiry is truly complete. I was operating under the impression the S-4/A could be cleared and the inquiry still continue. If completed, obviously a huge overhang has been lifted.
Extensions and terminations are distinct and different. The Agreement lives on at this point unless or until someone terminates it which they can do at any time.
when you back out cash and they are the only company on earth where people around the world stand in line when they launch a new product. It can't last. Either the valuation has to go much higher or the lines have to cease.
While remotely possible, what is BRY's motivation to terminate? Absolutely none (except in the highly unlikely event that they know they have a better suitor). Certainly, LINE is not going to terminate.
Unlikely true. There is no reason to have wording to allow either party to terminate the Merger Agreement after the End Date, if it automatically terminates after the end date anyway. It appears they can both just sit there for now and see if the SEC acts. And, unless BRY has a better offer in the wings (highly unlikely IMO), why would they terminate? They want to be bought. Management mentally moved on months ago and they are the lasts one to want this not to get done at this point. I think we are just in a waiting mode to see the SEC outcome. If they act quickly (like the last amendment) and favorably (likely given the minimal changes), then, we will learn what LINE and BRY want to do next.
The Merger Agreement is unclear. Two of the conditions for closing that have not been met are the respective shareholder votes, but the agreement also says "capable of being met." Well, one could argue the BRY vote is not capable of being met because of the $10 spread in the LINE/BRY stock price making the ability of LINE to unilaterally extend tenuous at best if BRY wants to take the position they don't have the votes. So, they may need to agree on an extension at this point in time.
What I don't know though is what happens if the Merger Agreement is not formally extended by the parities. If it's not extended, then, does it end? Or, can it live on until formally terminated by either or both parties? If the former, we will almost undoubtedly hear something before the market opens 11/1. If the latter, we may not hear anything until the S-4/A is cleared or there is some other reason the parties choose to communicate.
Job one is getting an effective S-4/A. That would prove LINE can get equity deals through the SEC and pursue deals other than BRY. As for the price of the BRY deal, I trust management to decide if it's worth more than the current offer, of if they would rather move onto other deals on their list and forego BRY, if it can't get done at the current bid. To me, a bad scenario would be if the BRY deal is pulled without a resolution to the pending S-4/A, so we are left with no BRY deal and no way of knowing if LINE can get any equity deal through the SEC or not.
Usually independent auditors value both companies to establish a fair ratio (or more frequently simply to justify and document that the ratio set by management was fair). I have never seen a ratio float based on changes in prices and, in fact, they specifically say in the Merger Agreement that the ratio is fixed and will not change regardless of changes in stock prices. This is the common approach.
Just returned from my morning routine, so haven't read it yet. However, given the modesty of the prior changes, the fast SEC action on that amendment, the quick response to the Friday SEC comments, and the fact that the press release seems to suggest nothing changed with regards to calculating the distribution, I would think any changes were very insignificant and the SEC/company appear to be working to get this done in the coming days. Now, watch someone actually read the document and note enormous changes LOL. GLTA
Don't give the kid too hard of a time. He's probably a bright young man, but has no experience and is cutting his teeth with a third rate firm. Unfortunately, the unprofessional way he is being taught to approach research will follow him and greatly limit his future prospects.