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lundi 19 mars 2018

RITE AID MERGER........There is a 5B$ unaccounted for

Many weeks after the merger was announced, i am still surprised that nobody, i mean really nobody has come forward to explain where the 5B$ missing is going.

On the original announce, it was mention that Albertson and Rite Aid expect to have close to 400M shares after the deal is closed and that shares start trading. (i will round the numbers here to 400M shares to be easier to understand)

IF shares are valued at 24$ as expected and that RiteAid actual shareholders get close to 30% (i will use 40% to help follow the money) then something is not adding up.

It would means that 70% of the 400 M shares (close to 280M shares valued at 24$) are not accounted for by anyone on the market.

That number of shares represents a whooping 6.7B$

Would that number be used to reduced overall debt? Increase the cash payout to Rite Aid actual shareholders? (even the 18 cents to be paid to RAD shareholder only represents close to 180M$)

That in conjunction with the actual release of a credit margin for 5B$ seems to indicate that either that money will be used to pay out debt or made a signifiant acquisition.

My impression is that this money will go toward paying debt and that means a lot for this merged company as they would go from 14B$ in debt to around 7B$ and would indicate that the real value of Rite Aid actually is not 2,50 (including the 18 cents payout) but much closer to 4,30$

Very very interesting and if i am right, it means that the price drop that we are seeing actually is artificial and would only served one of the underwriters for that deal.

Based on that, i am long on RAD from now on.

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