CZR "FOMO", page-697

Generally pretty happy with the outcome given the FIRB uncertainty. However, the market seems to be mispricing the probability of the Fenix-CZRdeal reaching the 75% acceptance threshold, which, based on the current shareholder register, looks highly likely.

• Creasy’s 52.18%stake is already committed, meaning Fenix only needs another 22.82% of shareholders to accept for the offer to step up from 26c to 30c. Given the nature of CZR’s shareholder base, this additional acceptance should be a formality (see below)

Information in 1.2(b) of the bidders statement:

“The Creasy Group, CZR’s largest shareholder (representing 52.18% of allCZR Shares) has provided Fenix with an intention statement that the CreasyGroup intends to accept the Offer, subject to no superior proposal being made(as determined by the Creasy Group), on a date that is not earlier than 21 days after the date the Offer opens for acceptances in relation to all the CZRShares.”

• Yet, CZR is still trading at 26c, implying that the market isn't pricing in the probability-weighted outcome correctly. If the threshold is reached (which it almost certainly will be), the true expected value should be closer to 28-29c , allowing for a small discount to the 30c final price due to deal timing and execution risk (e.g., Fenix has adverse movements in its share price)

Overall, there are a few reasons I think there is mispricing:

• Creasy’scommitment is the key indicator—when the largest holder accepts, momentum almost always carries these deals through;
• No rival bids have emerged, and given Creasy’s acceptance of the deal, it’s unlikely it will emerge before March 21;
• Retail and smaller institutional investors have every incentive to accept, rather than risk liquidity constraints or a lower price in the absence of the deal; and
• The mispricing at 26c presents a fairly low-risk arbitrage opportunity, with a clear 15% upside to 30c if the deal completes.

This looks like a relatively straightforward path to 75%+ acceptance, and the current price doesn’t reflect that reality