scheme of arrangement - game plan

  1. 635 Posts.
    After the market closed yesterday, MIM HOLDINGS reported the details of the long-awaited Xstrata offer.
    Anyone using the ASX website will be interested to see MIM's most recent closing price reported as $2.10 but that seems to be some sort of glitch.
    "[Today's intraday price of] $1.68 is the highest of any closing price it's had since October 1997," said an analyst.
    "Its top today is $1.70 and the bid price is $1.72.
    "That's saying the market is happy to play just under the bid price - that in turn suggests that investors are not expecting anyone to come in over the top.
    "Don't forget it's a scheme of arrangement on which the shareholders can vote - it requires 50 per cent of shareholders representing 75 per cent of shares to succeed.
    "A scheme of arrangement is not that unusual - it's probably most often used for mergers.
    "This one is a one-way merger.
    "The market doesn't seem impressed with the price being offered but there doesn't seem much chance of a better bid during the term of the scheme.
    "And the term is important because, being a scheme of arrangement, there is just one meeting at which shareholders can accept, whereas the deadline for acceptance of an on-market bid is often repeatedly extended to gain higher acceptance levels," he said.
    That also means shareholders won't have recourse to the regular reports takeover bidders have to lodge, stating the amount of the target's stock that has accepted - a useful indication of what other
    investors are thinking.
    "Shareholders must be mindful of the fact that while the bid
    appears underpriced, it's the best the shares have closed at in over
    five years," he noted.
 
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