Look at the % split. The proposal is for OSH shareholders to have 37% of the merged entity. Yesterday OSH was valued a bit under that using the combined MC's, and with the price movements today it is very close to the 37%. The $4.25 is based on the MC on June 24 and both companies have gone down since then. If STO were to reach their 52-week high then it implies a $4.60 offer, which is also the OSH 52-week high. Seems a reasonable starting point to me.
People might think OSH are undervalued by 20-30%, but don't forget that shareholders of STO would view themselves as similarly undervalued. STO have a duty to keep the dilution of their own shareholders to a fair amount. It might be opportunistic, but STO have still given a bit of a premium.
I understand OSH wanting to hold out for more, as STO have maybe started with something left in the tank. But I'm not sure they should go too much higher. Maybe 40/60. Do OSH shareholders think they could do better than a 40/60 entity if OSH were to stand by themselves from the current mid/high $3's? I doubt it. I don't hold either but have done contract work for both, so I am an interested but neutral observer. I think a merger going forward at something similar to the current proposal seems fair and makes sense for both companies.
OSH Price at posting:
$3.90 Sentiment: None Disclosure: Not Held
