Company mergers/take overs

stock_man · 21 September 2006

I have just finished reading Renee Rivkins book, and he states that one way he used to make a good deal of money was profitting from company mergers.

I have been following a few companies, and confirm that the SP have all gone up from speculation through to take over.

Do any companies go down in value when speculation begins, or the take over happens? (taking into account adjustments to sp, share holdings etc)?

doctorj · 21 September 2006

This doesn't answer your questions, but is relevant to your original point.

There was an article in the Aireview this week on profiting from merger speculation. It made the point that investment banks actively monitor this type of thing and maintain lists of what it believes are TO targets. It goes on to say that it's probably very difficult given the big one of late, Coles Myer was not predicted by the bank based on the documentation they received.

It then goes on to suggest other more probable ways to profit on takeovers. I don't have a link to the article handy, but you can look for it in one of the recent issues of AIR.

toc_bat · 6 December 2006

This is a post asking some general questions about takeovers.

Why does a company ann a formal takeover of another, why not just buy 51% of the targets shares? I suspect ASX rules insist on formal takeovers.

When co A ann takeover intention of co B do the shareholders of the target have to vote and agree to the takeover? Or is it a managemnt decision. What happens if some share holders are against, are their shares forcible taken off them?

OMC has just ann a takeover bid of itself by another co. The formal bid is for $1,10 per OMC share. Prior to the trading halt OMC was at 99c after the halt it shot to 117c. This is where I am lost. If the takeover offer is for $1,10 why are people willing to pay $1,17? Is this because an offer is only the beggingin, are punters expecting negotiations between the two cos to end up in a higher offer?

Lastly, dont remeber where, but I read recently something about a compulsory takeover, under what circumstances are takeovers compulsory?

bye all

bvbfan · 6 December 2006

Once share holding passes ceretain levels announcements need to be made.
Initially at 5% stage then whenever shares are traded.

A company can only acquire 19.9% without making a formal bid (I think its 19.9%)

As to the price going above 1.10 for OMC, the market/punters believe a high bid is either coming from 2nd or more parties or that the initial bid will need to be increased to get shareholders to accept

Compulsory takeover is when a bidder gains 90% of the shares in the target company, if a bidder doesn't get this level then the remaining shares stay with those who elected not to accept
ZIM, PMM a few examples of this.

Also conditions of many t/o's are the company getting a certain percentage of the shares in the target co

toc_bat · 6 December 2006

thanks bvb

so if share holders agree how does the transaction occur, is it automated or do shareholders have to respond to a letter? what if they are uncontactable? is there a certain time frame outside of which they may loose out?

this is all very academic as you can see, ok bye

bvbfan · 6 December 2006

Never having being subject to a takeover I'm guessing a bit here

But I think the bidder will send an offer document detailing the offer, they will have some sort of form to sign and return if you want to accept the offer by a certain date. The bidder may choose to extend offer if they want

I guess if they are uncontactable then they would be deemed to not accept the offer, if compulsory acquisition occurs then not much they can do.

trading_rookie · 6 December 2006

Do any companies go down in value when speculation begins, or the take over happens?

A few yrs back when the late Rivkin was selling the report on late night tele he stated the only company that bucked that trend was PacDunlop/PacBrands.

Noticed that late night info-commericals for the Rivkin report feature his son, still promoting the takeover targets.

I recall when Natfoods and Parmalat were both interested in Peters, a bidding war erupted and Peters shareholders were quite happy!

Only today Fairfax sent out a press statement outlinging that it was merging with Rural Press.

Rural Press shares went up, Fairfax dropped in value.

TheRage · 7 December 2006

trading_rookie said:
A few yrs back when the late Rivkin was selling the report on late night tele he stated the only company that bucked that trend was PacDunlop/PacBrands.

I couldn't think of any specific examples so good call. Several shares that I own have been subject to equity buyouts this year. All have appreciated significantly but I would imagine that a situation could arise where the company being taken over might be a dog on it's last legs and the company taking it over might be making a discount bid to the shareholders who would potentially snap up the offer knowing that they have no option. Sorry I don't have any examples. Bear in mind too that not too many companies would want to buy a crap load of debt unless the infrastructure belonging to the company was a perfect fit for their business model or their was some intangible value in the product that they thought was worth saving.

bvbfan · 7 December 2006

Pacmin buyout by Sons of Gwalia, one of the worst moves I could ever imagine anyone doing.

Company mergers/take overs

stock_man

doctorj

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toc_bat

bvbfan

toc_bat

bvbfan

trading_rookie

TheRage

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