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Paragon Offshore plc Message Board

jayjayvee 30 posts  |  Last Activity: Jan 29, 2015 4:25 PM Member since: Mar 11, 1998
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  • Reply to


    by nelsonsancho Jan 28, 2015 10:03 AM
    jayjayvee jayjayvee Jan 29, 2015 4:25 PM Flag

    There is still the matter of FTC approval of the merger. That uncertainty has generated a risk discount to be built into the current share price.

    LO's operations will be merged into RAI's except for blu e-cigs, which are being sold to Imperial, along with some of RAI's non-premium brands. Current LO shareholders will receive cash and fractional shares of RAI; another poster laid out the terms.

  • Reply to

    remember to vote

    by joehall2020 Dec 31, 2014 1:03 PM
    jayjayvee jayjayvee Jan 24, 2015 11:00 AM Flag

    boost -- that's .2909 of RAI shares.

  • Reply to

    will this stock?

    by joehall2020 Jan 22, 2015 2:56 PM
    jayjayvee jayjayvee Jan 23, 2015 12:20 PM Flag

    Please, don't jinx it! Seriously, barring unexpected FTC blockage of the merger, we should see a steady climb over the next few months until closing.

  • jayjayvee jayjayvee Jan 20, 2015 10:29 AM Flag

    I tend to agree, and in fact, "swapped" some PM for MO about 4 months ago or so. Foreign exchange effects on PM's earnings are tedious.

  • jayjayvee jayjayvee Jan 20, 2015 10:10 AM Flag

    I believe that the market's likelihood placement is between 80 and 85% currently: Using RAI's price at $68 makes the LO share merger value $70.28. Current LO shares are trading at $65.54 (9:58 am EST). If the deal does not occur I estimate LO will drop to $47.50 (I'm using 50% of $45 and $50). So the "gap" between LO with and without merger is $22.78. If we take the present value of the merger price ($70.28 discounted at 3% until my presumed merger date of 7/1/15) as a base, and then subtract the current LO price we get $3.82. To me this is the market's perceived risk. Divide this by the "gap" with and without merger and we get 16.8%, which is my assessment of the likelihood of non-merger, or conversely, an 83.2% likelihood of a deal.

    If one uses $45 or $50 as the LO price if the deal is scuttled percentages in a range of 15% to 20% result, which is the 80% to 85% I cited in the beginning.

  • Reply to

    Your thoughts on the merger

    by ashland01721 Jan 15, 2015 5:25 PM
    jayjayvee jayjayvee Jan 16, 2015 10:23 AM Flag

    One further thought: although RAI must divest some brands to Imperial, the "new RAI" can focus on the main, more premium ones in which there may be more price increase ability, and any newer products that can help bolster revenue lost as smoking decreases. I don't believe that the foregone brands will be meaningful bottom-line sacrifices going forward.

  • Reply to

    Your thoughts on the merger

    by ashland01721 Jan 15, 2015 5:25 PM
    jayjayvee jayjayvee Jan 16, 2015 10:17 AM Flag

    My opinion only: I think yes. RAI gets a juggernaut brand in Newport, and can effect efficiencies, which, like it or not, are necessary in the challenging cigarette/tobacco market here in the U.S. and elsewhere. LO is really a one-trick pony, albeit a successful one. Yes, it has some non-menthols and the blu e-cig; but the latter is not assured of any traction and the non-menthols are after-thoughts. Any regulation affecting menthol would impact LO in a magnified way as Newport is c. 90% of its revenue. So there is/was some risk in a stand-alone LO pending clarity on any action the FDA might take.

    As far as the deal itself goes, the terms monetize the value in LO. Effectively, we will get c. $69-70/share, which represents a large premium over its price six months before the merger rumors began.

    Lastly, the market over-reacts to a sub-par quarter, and I think that a larger, merged entity has a better chance of smoothing potential results bumps than the two separate, a potential help to share price stability.


  • Reply to

    Pre Market 1/9/15

    by k.bauer5124 Jan 9, 2015 9:26 AM
    jayjayvee jayjayvee Jan 15, 2015 3:35 PM Flag

    Reached $65 today, so as I stated before, a slow ascent. Evidently no signs of adverse moves by the FTC, so sit tight everyone.

  • Reply to

    Pre Market 1/9/15

    by k.bauer5124 Jan 9, 2015 9:26 AM
    jayjayvee jayjayvee Jan 14, 2015 2:08 PM Flag

    FTC still has to weigh in -- I've maintained mid-year '15 for closing for some time. Nothing has changed to sway that.

  • Reply to

    Pre Market 1/9/15

    by k.bauer5124 Jan 9, 2015 9:26 AM
    jayjayvee jayjayvee Jan 11, 2015 9:30 PM Flag

    Lingering uncertainty about the FTC approval...

  • Reply to


    by tjpandkhp Jan 4, 2015 9:07 PM
    jayjayvee jayjayvee Jan 6, 2015 10:05 AM Flag

    When the merger was first announced, RAI stated that its target was to maintain a 75% dividend payout (of net income). Currently the yield is between 4.1% and 4.2%. My own opinion is that the 75% payout will not exceed the 4.5% yield range. 5% is very aggressive and implies that the share price is ailing.

    My opinion only!

  • jayjayvee by jayjayvee Dec 24, 2014 10:55 AM Flag

    Approaching $64 now. As I thought, until we get a clear sign that the FTC won't impose any roadblocks for approval, it will be a deliberate climb to the ultimate closing price level.

    So, LO longs, 'patience is a virtue."

    In the meantime, a happy holiday season to all, and a healthy and prosperous 2015!


  • Reply to

    if the votes passes in late Jan,

    by joehall2020 Dec 18, 2014 7:57 AM
    jayjayvee jayjayvee Dec 19, 2014 11:19 AM Flag

    FTC approval's timing is a wild card.

  • Reply to


    by on3fr33bird Dec 1, 2014 9:45 AM
    jayjayvee jayjayvee Dec 1, 2014 9:57 AM Flag

    When the deal was first announced (seems like ages ago!) a value of $69-70/ LO share was cited. This implies a RAI share price of up to $67 (for $70 for LO). So RAI's current level at $65-66 is likely within expectations. Next quarterly result will clearly have an impact.

  • jayjayvee jayjayvee Dec 1, 2014 9:49 AM Flag

    Positive news, but not at all surprising: RAI and BTI would have deployed significant research/intelligence on the expected menthol outcome before making the overture for LO. What we need is a clearer signal that the FTC won't muddy the waters with any delay or request for alternations to the deal as agreed to. With LO still in the $63/share range, the markets still see some risk of non-closure.

    Good luck to all LO longs!

  • Reply to


    by jayjayvee Nov 20, 2014 1:35 PM
    jayjayvee jayjayvee Nov 26, 2014 11:10 AM Flag

    The official word when the deal was announced was first half of 2015. My guess is mid-year.

  • Reply to

    what to do with LO

    by daytrade50 Sep 20, 2014 11:52 AM
    jayjayvee jayjayvee Nov 21, 2014 8:50 AM Flag

    cobra's formula is correct but he understated the RAI price; at yesterday's $65.20, at closing LO would be worth $69.47. Don't forget that almost $19 of that is in the form of RAI shares which you'd then need to sell (if you want to realize the entire profit); tax implications of that are unclear.

    In my opinion (NOT ADVICE!) LO price should rise and approach the merger-deal value as it becomes clear that the FTC will approve the deal in its current form. We've seen it increase to $63 from the $58-59 level in the past month or so; this trend should continue barring bad news on the merger front. So if you wanted to get out before closing you likely can and make a $3 or $3.50 profit/share.

  • jayjayvee by jayjayvee Nov 20, 2014 1:35 PM Flag

    Creeping up there, as the perceived risk of non-closure of the RAI merger lessens. Bigdopey63 and the other shorts must be crying...

  • Reply to

    Care to guess our divvy increase end of Nov?

    by stockgumshoe Nov 11, 2014 3:25 PM
    jayjayvee jayjayvee Nov 13, 2014 9:38 AM Flag

    yes -- 1Q15 is what my "projection" was for. I don't think board will do anything aggressive; that, and modest EPS is why my increase is paltry.

    But let's hope that FTC clears the merger and we can get on with the share price where it should be!

  • jayjayvee by jayjayvee Nov 13, 2014 9:28 AM Flag

    Given that the Duracell deal was transacted largely via P&G shares, how will this translate into value for PG longs? Is it strictly in the share valuation given fewer shares outstanding? Insight welcome!

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