The following is not your valuation, but at least it is free... and hopefully interesting.
The Accept/Not Accept (binary decision) Offer decision is a very important financial one for everyone.... obviously, if money is important to you..
As said before, I have sent in my Acceptance... worth about 0.3%. Not much.
Why did I do that when everyone (those posting at least), pretty much without exception here have sworn blind, pledged faithfully that they will not accept!!!?
What have I done wrong?
I am assuming for arguments sake that almost everyone believes their decision is RATIONAL and the correct one in terms of putting the maximum amount of money in their pockets. Has reasoned out their decision. I will exclude those who are prepared to lose any amount of money to prove a point and be part of a like-minded crowd. That is not rational or profitable.
My own Personal Reasons I am happy to state.. and SHARE :
1. In addition to my prior holding, I recently put a large amount (for me) into AVB at average 8.6c. It was likely foolish! but it was because I felt that AVB was grossly undervalued at that price, and with 8 years experience with them, I knew the company. Timing was fortuitous. A month later they doubled in price through the Takeover. A good investor, one that survives to fight another day, knows when to take the money and run. I was grateful for that "luck" and had no intention of tempting fate in any way. I wanted to "lock in" my windfall profit, through Acceptance.
2. The recent Broker reports talked about a target price of Average 17.4c, prior to takeover. However the disturbing one was the GMS company-initiated assessment that put a very high value on the company. It served to conjure up, for a while, the high chance of a rival bid at.. 25c, 30c... That was a good time. Dreams. However director acceptance, repeated assurances in announcements indicating that there was likely no rival bid coming, squashed that for me.
3. The notion that a Bidder must pay Valuation or Worth (however those things are defined) or else be doomed to fail just did not hang with me. There has to be some discount to "valuation" to make it attractive. It is not all one way. Both Broker reports on AVB website (Hartleys and Carmichaels) confirmed this attitude to me. They acknowledged the gap between "value" and bid, and explained why they still viewed Accepting as the best thing for shareholders. The fact that both Brokers decided the bid was a good deal for AVB shareholders was persuasive for me.
"The offer looks like a good deal for AVB," Hartleys page 1
" is the offer a good deal for AVB shareholders?: We believe so " D J Carmichael page 1
No revised broker recommendation has been issued.
These expert broker comments were reassuring and reinforced me in my decision.
4. If I did not accept, where would the share price go after the offer closed?? Up or down. My personal feeling was that on balance it had a high probability of going down... there being no obvious reason for it to do otherwise. Thus by not accepting I would likely find myself subject to market whims.... with the sinking feeling of seeing a diminished or diminishing AVB share price... and no recourse. That possibility was totally unacceptable to me. Risk. To go from a high of euphoria to a depressing low. An unacceptable risk for me.
5. Directors recommendation. I happen to think very, very highly of AVB Management. What they say, I listen to and be guided by. Also although I say emotion should play no part, I confess to feeling a high degree of loyalty to AVB and its management. Loyalty. Yes it's a strange word.
6. The fact that should the takeover not succeed, there will be a pro-rata capital raising (see the announcement 16/5) so I will be called on to put money in, instead of having banked my wealth at 17c/18c and be gone!! With no ready cash to do that unfortunately, I would sit back and see myself diluted and if I was facing a low market share price, it would be a double catastrophe. By accepting I would avoid that scenario.
7. The fact that OZL is now trading at above $9.45 is nice. It just adds a bit more, fortunately. If I did not accept, this possible little bit more would vanish. Hartleys say in their report page 4 "Every 50c movement in OZL, represents a ~0.5c movement in the offer price for AVB. " That makes the offer worth 18.0c today. For me that makes the Offer even more of a no-brainer, and supports my decision..
8. I was disappointed that a royal bidding battle for AVB did not emerge. The very fact that it didn't was instructive though, both about the bid price, the desire for a company to integrate AVB, and AVB's intrinsic value. It was comforting and reinforcing to me in my decision to Accept.
9. Finally I simply could see no reason to not Accept. I looked at all the militant Not Accept posts and could find lots of indignation, emotion, criticism, but nothing sensible for me to hang my hat on.. nothing at all. The notion that if I did Not Accept, then somehow OZL would come back at some future time after closing of Offer with an unspecified higher bid, I could never risk my life savings on. It could happen.. sure.. but the risk factor was way too high. The sole fact that AVB is "undervalued" at 17c can be argued back and forward forever and a day... maybe it is undervalued?.. but that in itself I found to be not the slightest reason for me to not accept the Offer.
Anyway, each to his own.
It my reasoning behind my Own Personal decision, shared for interest ... for better or worse!
Is it "where I got it wrong" ??maybe so.
I will certainly be wearing the result of that decision.. no doubt!! I trust the outcome is the best one I could have made.
Also I have no interest in encouraging anyone to break ranks. Quite the opposite. Solidarity is very important. I always respect other's views.
For those stating that they will Not Accept I wish you luck and really hope you reap the just financial rewards of your decision.
cheers, PP
AVB Price at posting:
17.5¢ Sentiment: None Disclosure: Not Held
