Doing some math last night….
So the total value of SPG’s last buyout offer was ~$33B. Yet, because of the Judges ruling on Friday, SPG has allegedly pulled out of the bidding for GGP due to the issuance of the warrants. Let’s look at that decision to see if it make a whole lot of sense.
If you remember back to the original deal, Simon said the ultimate value of the warrants was $900M. So as to not be accused of “leaning towards GGP’s numbers, we will take Simon’s estimates at face value.
As of last Friday, Pershing has decided to pass on the issuance of warrants for itself reducing the total issued Friday by 14%. Now we have a total costs of ~$774M.
When we also consider BAM altered the deal to now only receive 40% of its warrants now and another 20% on July when GGP is scheduled to choose a plan to emerge with. That now mean the the actual cost of the warrants as of today is ~$309M.
Are we really to believe that SPG will walk away from the deal over $309M? Really? A chance to both eliminate is largest competitor AND become the clear giant in the industry, all at once and they will pass on this over $309M?
My guess is they sit back, lick their wounds and get over their disappointment. Once that is done they come to the realization of what they are about to let slip through their fingers and begin to chat with GGP behinds the scenes again. There is just no way Simon simply walks away over this….no way