Tendering deadline extension no surpriseAs halfcentman said earlier, this BHP news release we all saw smells of deep desperation. The deadline extension didn't surprise me, as that's what bidders do when they clearly don't have enough tendering going on to be successful. I've seen tendering deadlines extended multiple times in order to buy more time. That could have happened regardless of whether they were talking to Wyloo.
The only reason they would extend is because they didn't have enough tenders. It also shows that Wyloo wasn't tendering at 75 cents on this first round, just as I suspected in my recent post.
I believe they would have hinted it publicly if they were to do so, due to the reputational trust reasons I explained in my earlier post. The BHP news release could have been a back-handed way of them giving off that public hint of maybe giving in. But I think the chances of that are way less than it was driven by BHP to scare more shareholders into tendering at 75 as their deadline approaches.
They each have a totally different vision going forward. Wyloo wants shareholders to have the choice to stay aboard, BHP doesn't. Wyloo wants to transplant the board, BHP may not, which may be why Noront's board seems so easily supportive of BHP.
Given that Wyloo wasn't tendering at 75 cents on their own, I doubt there is much BHP could actually say to sway them at that price point. That still bodes very well for shareholders.
BHP could offer Wyloo 75 cents, and a cut of Noront's profits going forward. Possible.
Alternatively, BHP could offer more than 75 cents, and a cut of profits. More possible.
This is in my opinion a more likely scenario. I would think 80 or more cents, at the least.
If I was Wyloo, holding around 37 per cent of Noront's shares, I certainly wouldn't surrender them over a mere nickel above my offer of 70 cents. Since Wyloo would need to relinquish any possible future control over Noront, I suspect any deal would require a bid larger than 75 cents per share and a cut of profits. Otherwise, Wyloo still holds the cards, not BHP.
If I were Wyloo, I would use my leverage to get way more out of BHP before agreeing to anything. Clearly the rest of the non-management shareholders aren't budging at 75 cents either. They all now understand that these shares may actually be worth significantly more in the long run.
It still then bodes very well for shareholders. This desperate-looking news release from BHP may actually add fuel to this narrative. I know it appears to have spooked some shareholders on Tuesday, but looking more deeply at it, it actually clears the way for a possible higher stock price, not lower, as Wyloo is likely haggling behind the scene for a far richer deal, if there is to be any.
As well, k66666 and wheelsonthebuss have mentioned the possibility of a third bidder jumping into the fray, which is very possible and becomes more possible as time passes. I believe Wyloo and BHP are mindful of it, which could prove costly for both of them.
And the psychology of this is just as intriguing. Since they are both Australian, there's more personal pride at stake for Wyloo than if they were butting heads with a non-Australian firm. This would make them stick to their guns even more on this file, not less, as they have to face BHP every day down there.
Stay tuned folks, I believe shareholders still hold the cards on this one.