GREY:LRTNF - Post by User
Comment by
thelostarcon Feb 06, 2022 2:47pm
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Post# 34402638
RE:RE:Reporting
RE:RE:ReportingOr because AngloGold is circling and prefers the public not see improving production numbers and turnaround (if it is actually occuring). If Anglo sees any sign of a turnaround before competitors do, they will not hesitate to act. Offering $500MM-$600MM for this asset and closing fast would not be a problem. Further, if Anglo is looking to make a move, it would most likely apply a breaking fee negotiated with management which would put any other bidder at a paper loss to begin with.
Say Anglo's bid is $500MM, with generous payouts to management, plus a $75MM break fee. Then, any other bidder that comes in would not only have to match, they would also need to consider that they are burdened with the break fee. Just one mechanism by which the acquiring company can discourage other bidders.
This is what happened with Precision Drilling's bid for Trinidad Drilling which they lost to Ensign. The acquiring firm had to pay Precision the break fee, routed through the target firm of course.
How such fees and amounts are negotiated in the back of boardrooms and closed social venues of the elite beats me. But you can be sure AngloGold will not let this slip out of their hands so easy. 19.9% ownership with impetus to act in order to diversify from legacy asset base. Anglo is desparate to enter Canada. Just a matter of time before an offer. The only question is at what price? You can be sure the offer will be cash and our story will have ended. But how much cash? It is of course a golden era for gold mining, companies have apetite for assets and banks have a loose leash for funding.
I am surprised we are not seeing more M&A activity in the sector.