I would assign zero value to the incentive to get break-even. This guy Bender has had a good legal career in O&G and is probably worth $10m+ judging by his stock sales the past few years. I think there is no chance that getting break-even on a small stock purchase two years ago is going to affect his decision making. Career risk, lucrative directorships, future business opportunities and doing things right 'by the book' are all much, much more important.
That said, this could still be an interesting opportunity because the "lowball offer followed by a small bump" is an often used playbook because it is good for everybody. The directors can say they fought valiantly for a better price, Shell still strikes a bargain deal but can pretend there was a fair process and shareholders feel slightly less screwed.
On the other hand, that logic could be used on Shell as well. Is Shell really going to care that much if he pushes for $17 instead of say $15? Is that really going to affect his career at age 63? An extra ~$250 million for a $200 billion corporation in what will probably be an all stock deal. And they are still ripping off SHLX holders by a wide margin. So Shell wins and he doesn't look like a fool.
But yeah, probably overestimated a bit how much he will care.
Well, my pushback would be that the difference is that Shell paying $2 more is a $250m decision - maybe not that important at the board level but some mid-level careers and bonuses probably depend on not pissing away $200m. So at some level I think people there care more about it than Bender. I don't know the guy, not judging him, but for somebody in his position I think the 'optics' of the deal are very, if not the most important.
Still looks somewhat interesting though, I have to admit.
hat said, the market seems to price that in already: a $1 or $2 price bump and some delays, let's say the deal closes in August / September. Makes the current price look reasonable, perhaps slightly cheapish - especially if you expect there's a small chance of a larger bump.
But I don't think I am particularly interested though at current prices (~$13.60).
edit: forgot about the two dividends - that makes it a bit more appealing.
I would assign zero value to the incentive to get break-even. This guy Bender has had a good legal career in O&G and is probably worth $10m+ judging by his stock sales the past few years. I think there is no chance that getting break-even on a small stock purchase two years ago is going to affect his decision making. Career risk, lucrative directorships, future business opportunities and doing things right 'by the book' are all much, much more important.
That said, this could still be an interesting opportunity because the "lowball offer followed by a small bump" is an often used playbook because it is good for everybody. The directors can say they fought valiantly for a better price, Shell still strikes a bargain deal but can pretend there was a fair process and shareholders feel slightly less screwed.
On the other hand, that logic could be used on Shell as well. Is Shell really going to care that much if he pushes for $17 instead of say $15? Is that really going to affect his career at age 63? An extra ~$250 million for a $200 billion corporation in what will probably be an all stock deal. And they are still ripping off SHLX holders by a wide margin. So Shell wins and he doesn't look like a fool.
But yeah, probably overestimated a bit how much he will care.
Well, my pushback would be that the difference is that Shell paying $2 more is a $250m decision - maybe not that important at the board level but some mid-level careers and bonuses probably depend on not pissing away $200m. So at some level I think people there care more about it than Bender. I don't know the guy, not judging him, but for somebody in his position I think the 'optics' of the deal are very, if not the most important.
Still looks somewhat interesting though, I have to admit.
Good point, maybe I was a bit too optimistic here. A 10% return in about 6 months then.
hat said, the market seems to price that in already: a $1 or $2 price bump and some delays, let's say the deal closes in August / September. Makes the current price look reasonable, perhaps slightly cheapish - especially if you expect there's a small chance of a larger bump.
But I don't think I am particularly interested though at current prices (~$13.60).
edit: forgot about the two dividends - that makes it a bit more appealing.
Clever idea
Ha! I bought calls like 2 weeks ago for just this scenario; didn't have any timing in mind so just got lucky. Sort of have to admire Shell's chutzpah.
Well mr Bender delivered! Nearly 20% return in 5 months.