GREY:KXLAF - Post by User
Comment by
hrattleon Oct 27, 2012 7:34pm
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Post# 20531622
RE: RE: I like it!
RE: RE: I like it! Should I sell PDG now or wait for the AR shares?
In general you should always sell. A takeover in theory gives full value for the shares (the market operates on marginal value) - getting full value is always good. In addition, the new company will take some time before the acquisition becomes accretive - for juniors this is a much longer process - so the merged company should suffer short term from this acquisition.
However, if the price paid was cheap for whatever reason or the merged company provides some synergy not available individually then the new company might get a boost (this happened when KXL acquired GGR to form PDG). As PDG hit 90 cents at the beginning of the year there is a case to say AR bought cheaply and as AR has resources that PDG does not have i.e. real production expertise and cash flow there is clear synergy.
You have to weigh these and decide. For me, I sold at $1 - a bird in the hand, lack of knowledge of AR and wanting this money to go back into juniors were my deciding factors but I didn't have a large holding left. I do think AR got the better deal.