Q: Hi 5i
How was the Strathcona conference call?
Strathcona announced they would be paying out a special $10 dividend if the meg deal does not go through.
How would 5i play this?
Currently a holder of meg...Wondering if this is an opportunity to hedge a little?
Where do you think meg ends up if the deal fails?
Also would you continue to hold meg...the clock keeps ticking on this one.
thx
How was the Strathcona conference call?
Strathcona announced they would be paying out a special $10 dividend if the meg deal does not go through.
How would 5i play this?
Currently a holder of meg...Wondering if this is an opportunity to hedge a little?
Where do you think meg ends up if the deal fails?
Also would you continue to hold meg...the clock keeps ticking on this one.
thx
5i Research Answer:
Since SCR has discussed the potential dividend, the stock might not make a huge move, but we still think it would be positive for shareholders. SCR's next conference call is scheduled for Aug. 7. It disclosed the $10 dividend idea on a podcast. MEG still trades at a premium to the offer, and we doubt it goes through at the current offer. SCR as a hedge to MEG is not a bad idea. SCR would need to come up with $2.1B for a special dividend, and selling its MEG shares would generate about $700M of that, if needed. MEG was $21 before the offer. With a failure, it would drop, but would likely retain some new takeover premium, so might drop to $23. It still has lots of potential and we would be fine keeping it as a solo company.