Buyout of ROE: Corp body language hints NEG. with MAJOR OILThe buyout of ROE could have been done at anytime. There was no rush.
RECO determined a value of $ 155 million as follows:
Stock price at $ 7.62 was $ 1 billion valuation.
$ 1 billion / 6,500,000 acres on Nambia land = $ 153 per acre.
Then land held in Botswana of 1 million acres was valued $ 153 million + a little premium.
If RECO stock went higher thne less shares would have been given to ROE. It all comes out to the same.
So this begs the question: what motivated both ROE and RECO into a sudden deal that could haved waited?
The only thing I can think of is that RECO was approached by two (2) major oil companies wanting a deal and were going to use some leverage like back door entry via ROE with hostile buyout.
ROE saw the writing on the wall and did not want sell out cheaply so rush to unite with RECO.
In this way, there is a BIDDING WAR between the two (2) major oil giants.
If I were the oil giant I would offer $ 45 per share for 50% of the license in Nambia and Botswana.
This would mean an offer of: $ 5.8 billion
We would cash up and, then get 50% of the oil.
The issue with major oil is that the longer they wait the more expensive it will get. If drill hole 2 is done and successful you can expect many parties and, the 50% portion will be worth DOUBLE the price of $ 90 per share.
In any event, RECO has an obligation to disclose to the market that it is in negotiations with 2 MAJOR OIL companies, if these rumours and hint are true.
mpo