Why did ESL need to pay .2Billion for Sears Holdings?
Related to this question. Yes, I know that the operations of a big company isn't directly related to personal finance, but understanding this seems an important part of investing, for instance SHLD is a stock a person might "invest" in, and knowing why it is priced the way and why companies do the things they do can help to avoid misconceptions that can affect one's personal finances when investing.
My question is this - why did Eddie Lampert through his ESL hedge fund need to pay .2 billion dollars for Sears? The price of SHLD is, at the time of writing this, up 36% giving Sears Holding a market cap of 73 million dollars. I was also reading that Lampert and ESL together own just under 50% of the shares in SHLD. Why couldn't Lampert just submit a tender offer for the remaining shares? Even if it did this at /share (at 50% premium over today's price) this would only cost him / ESL around Million dollars and I would have to imagine that given the uncertainty surrounding Sears he would likely get enough shares for the tender to go through. Yet he is offering to pay .2 Billion, why? I realize some of this is in the form of debt forgiveness, but he has already paid a cash deposit of 1 Million dollars, which is over twice this amount. Wouldn't this imply, assuming that the deal is approved by the judge that the actual market cap of SHLD should be at least this amount, meaning that it should be worth over /share if the deal is approved?
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Without reading anything about this specific case, usually numbers like this are some sort of total commitment amount. A financing arrangement that will provide 0mm each month for five years would be in the news as a B offer.
I suspect this B "offer" is really regular access to a smaller amount over a period of time provided certain performance levels are met, not B of cash right now.
Further, Sears is in bankruptcy so the market cap isn't terribly relevant. In bankruptcy the offer would need to be accepted not by the shareholders but ostensibly by the creditors.
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