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Courtside Acquisition Corp (CRB / CRB-WT) just went through a similar deal. It's interesting to see what happened there.

In that case, before the deal, the stock was at about $5.66 (equal to the cash value) and the warrants, with a strike price of $5.00, were at about $0.37.

As with your thesis on Community Banker, the value in the warrants was based solely the chance that the deal would be approved, because if it was not, the warrants would be worthless. So you could buy a warrant for $0.37 that had a strike of $5.00 on a stock trading at $5.66, the discount presumably due to the chance of failure.

If the deal were approved, the warrants should trade up both because they'd represent a chance to purchase a known quantity at a higher price, plus they should have some time value since they last until 2009.

Well the deal got done and now the stock is at $5.32 and the warrants are trading around $0.46 - $0.50. The 35% upside is nothing to sneeze at, but the two securities didn't move as expected. At $0.50, the warrants apparently have $0.32 of intrinsic value (i.e. the difference between the strike of $5.00 and current market price of $5.32) and the remainder is time value.

There are rumors that the more recent SPACs have a lower threshhold required to kill deals (60-70% rather than 80%), so the market may be adjusting to compensate for these deals. From that perspective, Community Banker might be one of the last of the deals with an 80% chance of success.

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