That the stock is trading at a level so below this approach,...

That the stock is trading at a level so below this approach, irrespective of how indicative, conditional or otherwise qualified the approach is, surprises me.

This company is now clearly in play, with a lame-duck board having insufficient credibility to defend against takeover bids.

So I put the odds of there being no further bidding (from either Lone Star or another interloper) as low, say <15%.  In which case the share price would ease back to $2.00 (it wouldn't fall to previous lows purely because of today's announcement)

And then I think there's a 50% chance a 10% higher bid, so $2.80, emerges.
Also a 30% chance that a bid of $3.00 materialises, especially if an additional acquirer emerges.
Of course, there is an outside chance (5% odds) that a bidding war erupts which could see a $3.20 or higher share price.

Throw all that into a weighted average algorithm and you get a probability-weighted return in excess of 20%:



Asymmetric investment return opportunity.
The merger-arb boys will be all over it.

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