Came across this proposed deal today.
At first glance it might appear that LBOing Greenland, likely with 100% debt as the strategic [USA] is highly levered, is a bold high risk high return move. At present, the target seems to be out of favor for the following reasons:
1) Really fucking cold
2) No one lives there (pop of ~56,000)
3) High suicide rate (10% of males attempt)
4) Zero natural resources
5) Weak corporate governance (currently subsidiary of Denmark)
Bull case: the fears over the long-term secular trend of global warming is overblown. Once the ice is fully melted, the unlocked real estate can be used to combat overpopulation and crowding through development of expensive condominiums or mixed-use housing. Large coastline (~44,000 km) can be used for development of resorts for both families and young vacationers.
Bear case: The multiple contraction caused by said secular trend and business risks have resulted in this becoming a VALUE TRAP that will weigh on the strategic's financials until it is inevitably spun off as a failed acquisition. On the same thread, even if the ice is fully melted the temperature issues will not disappear thus preventing any development. Also little to no synergies with acquirer.