I completely agree with your analysis. As a shareholder of both companies, my take is this: My Underworld shares which are fairly valued get converted to Kinross, which are undervalued. I don't mind owning more Kinross, and here's the kicker: if you figure in the front-running that seems to have happened, I get a 45% bonus on my Underworld (not the 39% posted). I get it converted into undervalued Kinross without a capital gain.

Now, board members and executives of Underworld would have options they could easily find the money to exercise, at much more than a 45% profit, capital gains tax free, in Kinross. To top it all off, Kinross is undervalued and will probably pop another 30% the next time gold goes higher.

Give the shareholders enough they won't get upset, and give the board members and executives extra to motivate them.