RE:RE:RE:RE:This is a GIFT at this level of $2.51 !! Bat pays $3.22 !!! 1hot-techwoman wrote: quinlash wrote: Looking at the original sharecount vs the additional shares to be issued for the BAT deal I have pretty much come to one conclusion as to what this deal actually is, that being a Hostile Takeover.
I am not seeing anything else to justify the move by BAT and the Press Releases lack any other justification for the move by BAT.
JMHO of course so DYODD
Sounds possible Quin? why buy shares in company at $3.22 then have it fall to $2.19?
Really trying to wrap my head around this one....lol
Cheers :)
Imagine you had a boat-load of money and you wanted to take over a company. You would want to do it in the cheapest way possible so you weigh your options.
1) Make an outright offer and essentially tell the world you are trying to buy someone out.
2) Buy out the majority shares on the open market
3) Offer cash for a chunk of shares and get the rest off the open market (or add to existing position)
Option 1 could cause a bidding way. Just like at an auction others may start to come in and also bid on the company. The other buyers could be serious but they could also be competitors to BAT who just want to see BAT spend more money than really necessary. The downside to BAT is that they would need to risk paying more or risk not getting ownership.
Option 2 a hostile takeover on the open market has it's own challenges. The "attacker" (BAT) would be only allowed to buy 5% of the average trading volume over the trailing 90 days per day (something along these lines, I haven't looked up that regulation in a long time). This translates to a long and drawn out buying process which eventually starts pushing shorts into covering and driving up the SP, it would also draw in additional buyer so again, increasing the price per share. The end result is that the take-over could be sucessful but at an unknown total cost.
Option 3 allows BAT to know (with confidence) the total percentage ownership post deal as well as total actual cost of getting that ownership. As a bonus, any other competitor coming in to also try and take over the company would be at a disadvantage as BAT would be leaps and bounds ahead of them in ownership stake. Essentially another player would have to be HIGHLY motivated to compete.
Anyhow, IMHO Option 3 is in play. This would explain the offer and lack of insider buying going along with it. It's just a guess / speculation however it makes sense from what I can find.
Hope that helps !