Biglari Was Persistent In Pressing WEST Deal

[Parsad]

Indianapolis Business Journal article on the WEST/SNS deal.  The article treats the deal with some negative connotations, including that Sardar was self-dealing, but I think the structure was implemented primarily to equalize the disparity between market price and intrinsic value of both businesses without issuing undervalued SNS stock.  Cheers!

 

http://www.ibj.com/biglari-was-persistent-in-pressing-western-sizzlin-deal/PARAMS/article/11379

[Guest Bronco]

Help me out with this...I thought the SNS shares owned by WEST were already distributed to WEST shareholders.  The article made it sound like that still hasn't happened.

 

I must be missing something - any help appreciated.

[Parsad]

No, the article actually says that the shares were distributed:

 

The rest of the deal’s $39 million value comes from Western’s transferring directly to its shareholders 1.3 million Steak n Shake shares it already owned. That transfer occurred earlier this month.

 

Cheers!

[Guest Bronco]

Parsad - thanks, I must have read the article too fast...(I shouldn't be doing this at work anyway...don't tell my boss!)

 

While we are on the topic, any thoughts on WEST as an investment?  If I do some quick math...if corporation earns $14 on a $100 par instrument (14% note), then after tax the amount is close to $9.  If that is distributed to shareholders, the net payout is about $7.7 (after 15% dividend).

 

So if I buy the stock at a level where the underlying note is $14 percent, I could expect a 7%+ return.  Any thoughts?  This is back on the envelope, but take it for what it is worth.