Incitec Pivot Ltd T.IPL

RE:RE:RE:RE:RE:RE:RE:IPL asking price-24$

[Maxmoe]

Here's a nit, for you nitpicker. I didn't say bip had 20% voting interest, I said "unless another buyer has tied up 20% ownership" . Brookfield can use made up words like economic interest but I beg to differ and I'm SURE the OSC will as well. It's ownership if they "own" the economic interest. Brookfield unashamedly refers to their 20% interest. If that's not how it's currently clearly defined in the securities act, it will be made clear to them. I suggest you review the act re warrants,options, swaps,derivatives etc and how the osc interprets them with regard to insiders and permitted bids. By the way, here's an interesting question that will make you and Brookfield squirm, who wrote the other side of that swap? They are already underwater unless they hedged with say call options, but who wrote the calls ... and so on.  Follow the money and I doubt the osc will be happy.

FreddieMac wrote:

This is interesting but incorrect    Brookfield has tied up an approximately 20% economic interest, but I point out that does not mean they hold a 20% voting interest.  There is an important distinction.  

If you go and read the bid filed by Brookfield it shows that they own slightly under 10% of IPL's voting shares and have achieved the remainder of their equity exposure via an instrument called a total return swap. It is important to point out that such an instrument does not confer the right to vote the underlying shares. So although they may benefit economically if someone else ends up buying IPL, they will not be able to vote 20% of the shares against such a transaction, as they only have voting control over slightly less than 10%.   Many commentators on this board have missed that distinction so as I said, go and read up on your Canadian Securities Law.   

 

Maxmoe wrote: The "go shop" clause is also accompanied by the right of first refusal, ROFR, clause. This makes it near impossible for a new bidder to emerge given the old bidder can, and will, just match the offer. IPL is in play now so unless another buyer has also tied up 20% ownership, the "go shop" clause is useless. Much better for shareholders is what we have today. IPL is free to entertain any and all options to maximize shareholder value whether it involves Brookfield or not. The "go shop" alternative ties IPL to involving Brookfield whether IPL likes it or not. A poor choice.

 

FreddieMac wrote: This is an excellent piece and correctly identifies the use of the "go shop" term.   It gets used when a bidder is confident that there is a very low (or manageable) risk that a competing and better offer will emerge.   When no such competing higher offer is forthcoming, the original bidder can then say "see, we are the only one willing to pay $X today and although you may feel your shares will be worth more in the future, NO ONE TODAY IS WILLING TO PAY A PREMIUM ABOVE OUR BID TO GET ACCESS TO THAT BRIGHT FUTURE YOU ARE POINTING AT." 

It will be most interesting to see how much information IPL management suddenly sees fit to release publicly, after they have been so quiet for so long.  There could be some decent surprises to the upside, and that would help explain Brookfield's interest in IPL in the first place.

Looking forward to reading the Directors Circular that IPL will file in about 2 weeks. For those of you who don't know what that is, go and read up on your Canadian Securities Law.

downwithdotcom1 wrote: sorry, its YOU that are being naive-BROOKFIELD is calling out management/BOD with their "its too low" defence (maybe to protect their own jobs) . With a shop it around clause -this would avoid any kind superior break fee that sometimes is part of the language in a takeover. FACT: IPL is only worth what some-one is willing to pay for it. BROOKFIELD has let it be known that they would have raised the price subject to getting access to private data . Now,, IPL is going to go public with confidential information (ie off take agreements, status of partnership ) and yet IPL refused to share this same information with a suitor all this time..WHY????  They could have signed a legally binding confidentialy agreement to enter advanced disccusions and then to argue a price based on known financials but, again, IPL refused. WHY??  No harm lost - IPL can still reject the stated offer but do this with datapoints as to why not. The question that needs to be asked is management working for the shareholders, or are now working for themselves?? Anyways, the story is out and its the markets that will decide-i expect if IPL does release private info - BROOKFIELD will up the offer to $18 + and then a white knight offer will be needed to get a higher price..dwdc