Just to close ...... before putting Ithaca back in my draw.
A poster on the LSE board alerted me to an interview with Paul Mumford of Cavendish who is still against the deal. My response included some research I conducted yesterday in relation to my ‘question’ so I thought it might be of interest here.
Londoner7
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Charliee, thanks for the heads up.
PM came out against the offer on day one, but it's good to see he hasn't changed his mind after further consideration - I wonder if he's had his discussions with management on their recommendation of the offer.
But his comment is a little misleading. There isn't a vote as such. Delek are proposing a tender bid at an indicated price of C$1.95 inviting shareholders to tender their shares.
Yesterday, I had a brief look into the experience of other Canadian bids. Based on this I estimate there could be shareholders representing 10-20% of capital who are either unaware of the bid or for other reasons hold out beyond the deadline even after the acquirer has posted news that the majority have tendered. Worst case, if the bid is successful payment is delayed to these shareholders.
I'd estimate that the top ten minority shareholders, including Cavendish (PM), account for a total of 20% - 25% of Ithaca's shares. Delek will need successful talks with all these holders to get their backing and they would still be short of their target.
The bid circular is expected prior to
31st March. I guess Delek reserve the option to post earlier rather than later if they get sufficient indications of support or for some other reason. But I expect the circular to follow the final results due end March when we'll have an update on Stella production volumes. Delek will be soliciting institutional shareholders to close the gap between the likes of Paul Mumford (who alone speaks for more shares than Ithaca management) and their proposed C$1.95 offer.
In the meantime a question private investors will be asking themselves is, why hold on for at least another 2 months for a 25% premium on the current bid (Paul Mumford’s price) with no guarantee of any premium, or a failed bid and a return to the Ithaca story with perhaps a 5-10% pullback, when you can put your investment into other ideas?
It’s clear that a number of shareholders have cashed in albeit with much shouting and wailing, as evidenced by these BBs. On balance taking account of current market pricing (I’m an investor and not a trader) and the degree of protection the bid offers on the downside, I decided to maintain my holding in Ithaca and monitor proceedings.
As a result of smaller shareholder selling there will be a consolidation of holdings to the advantage of Delek. I say this because for Delek’s bid to be successful they need a significant number of informed shareholders alert to the bid with a clear valuation in mind. I believe this is also to my advantage in terms of maximising my investment.
I see three outcomes:
1) I secure a higher price.
2) I accept C$1.95
3) The bid fails and the Ithaca story continues, albeit with a temporary pullback.
I attach my own probabilities to these outcomes and I’m happy to let this portion of my portfolio ride out developments. I’m actually quite excited by the prospect of watching this play out and there’s nothing like having skin in the game.
Cue more shouting and wailing! ;-)
Londoner7