Any thoughts from the group on the best course of action in light of the pending acquisition?Sell now, wait and see?????
Well the upside of holding is 3.7%. From what I've seen so far it's not very clear how long this deal is going to take. The article I read says the deal needs be cleared with regards to anti trust regulations but I don't see that as a problem with Nike dominating the shoe market. I'm going to wait until I have a few more details (time frame primarily) but will probably sell. Even if it was a stock deal (which it doesn't appear to be) I don't think I would want into adidas.-- Dennis
The buyout offer is 3.8 billon. So with 59 million shares outstandingwe are looking at $64 per share.
The other risk of selling now, is the possibility of missing out on another bidder. I have no idea how big of a risk that might be.Ed
I think the risk of another bidder is minimal. Because of size, Nike is the only other potential suiter. I am assuming chances of deal occuring are very high because a SEC filing 8K entry into material agreement has been made by rbk and I don't think there are any other potential bidders who are likely to thwart this deal. Furhtermore, the generous premium at $59 a share will likely win the approval of rbk shareholders. With the stock at $57 a share and the buy out price at $59, the $2 reward for those who hold or jump in now equals about a 3.5% return (2/57). This is slightly higher than what you can get on a high yield online savings account, so what this tells me is that investors are pretty confident in the deal going through because of the low risk premium. I would expect rbk's price to come ever closer to $59 as we get closer to the deal actually occuring. However, any uncertainties or delays that come up will likely produce a good deal of volatility. Personally, I'd like to get a price closer to $59 before selling.
I also would like to get closer to $59 before selling (who wouldn't?).However, debating the idea of selling before the deal closes, this is what occurs to me:1.) I'm in over a year, so short-term gains not an issue.2.) Agree with roberrabbit: I don't see anyone else upping the ante for RBK.3.) Again agree with roberrabbit that the risk of the deal being derailed by shareholders or antitrust regulators is minimal.4.) I understand that the deal 'could close in the first half of 2006' (from the AP story).5.) The upside from here is ~3.5%.So, what I'm looking at is holding my smallish position for another 7-10 months for a 3.5% return. I feel like there are some better opportunities than that out there right now, but realize I may be missing something. Would love to hear input from you guys.
OK, I just sold. Here is my thinking.1) roberrabbit is probably right about Nike not buying as easily. Although some other company may want to buy in to diversify a related product line, I would never buy in for that kind of prayer so why hold for that.2) I am beyond one year of holding - also losses to offset the gain anyay.3) I didn't buy into Reebok expecting a quick jump like this so this is like manna from heaven. If I hold I am completely changing the investment parameters.4) Tom will either say hold or sell. If hold, no change. If sell, maybe enough people listen to cause a drop. Not sure about that last thought though since the sale price is a benchmark.There it is. Good luck to those who hold, Ed
I originally purchased RBK on the recommendation of the Motley Fool Investment Advisor newsletter. I did my homework: it had been trading a goodly margin below its intrinsic value for some time; its marketing dollars were being spent efficiently; I couldn't find much wrong with the recommendation. So I went long for a little more than a year with a very small position.But ya know what? I don't like the shoe business. I don't understand it. I don't *want* to understand it. And I sure as shootin' don't want to try and understand an overseas-based shoe business, which is what RBK will be once the merger is complete.I took the opportunity to get out, with about a 50% gain, and I feel really good about that.Just one Fool's opinion ...
I to purchased a small position on a recommendation from TMF Stock Advisor.As was mentioned by an earlier post I did not expect to be rewarded with this size gain (just over 50%) in what, 18 months. Actually it would have been nice if it had come quicker... Also purchased JBLU from the same monthly recommendations and needless to say I am still waiting for that to get back in the money... Hope that did not sound like crying!!!Bottom line to me is that I would probably sell this type position in this type investment whenever I had this type return. Did not expect it to be a to the moon rocket or to be a 3 bagger in my lifetime. The company just does not fit that mold...I sold @ 57.20 the day of the announcement knowing that it could and should go to 59 but who knows if and when. Granted the risk of holding is small but so is the potential 3% or 4% upside from here. You are already down another $1 while you decide...Just one more Fools opinion...
Hey4ndr3wThanks. You made me realize that I was thinking about holding this position to squeeze out the last few drops for very little upside. And that from a business that I, too, do not like or understand. Way too quirky. Too dependent on the whims of children, and the success of the next big basketball star.Adios Reebok. Thanks for the 50% Tom!KeithFool1
Well, if the shareholders would be getting the amount of the buyout if dividing it into the shares this would be great but my undertanding is that the shares will be bought for $59 each, not $64. Am I correct?
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