where are bigstar and westcote?, page-18

G'day Capnbling1,

I am no expert in takeovers and hostile takeovers, but I will have a go for you.

SDL have 2,709,995,932 shares and there top shareholders include:

Talbot Group: 433,599,349 (16%)
Capital Group: 146,339,780 (5.4%)
UBS Nominees: 141,348,113 (5.22%)
Deutsche Bank: 138,209,793 (5.1%)

Total: 859,497,035 (31.7%)

Now I don't know much about the relationship between SDL and the likes of Capital Group and UBS, although I have got no reason to doubt them, but surely the relationship between the board and Talbot Group and Deutsche Bank must be pretty strong.

On top of the above, someone like George Jones also holds over 15 Million shares, which would equate to over half of a percent of the company.

For a hostile takeover to occur, they would need to acquire a majority share, but it is difficult to see where they are going to acquire these shares from without the support of the board and major shareholders.

Now there is a chance that an organisation could have quietly been accumulating under different accounts to avoid the 5% radar, but over the last 12 months there has been a volume of just under 3,000,000,000 shares traded, so I am doubtful that they would have had the oppurtunity to acquire a decent amount of shares through this method.

As I see it, they would need to cover at least two of the three options below to acquire the required amount of shares:

A) Convince the major shareholders
B) Convince the Board
C) Convince all the smaller investors

I just can't see the major shareholders selling out, unless of course it is a deal too good to refuse.

I also can't see the smaller investors agreeing to the price, unless of course it is supported by GJ and the Board.

I might not quite understand it fully, but providing you have a trustworthy board, takoever bids can be healthy, as it shows that there is interest in the company and it also helps define the true value of the company.

If GJ and the board were to come out and support a takeover bid, it could be because:

A) It may be a really good deal, too good to refuse
B) Things may not be as rosy as they seem, and getting out is the safest option.

You can rest assured though that after everything GJ has been through with SDL and all the hard work that he has done, that he will not be prepared to sell out lightly.

A takeover bid doesnt concern me, in fact I welcome it. Although like a lot of shareholders, I would like to see SDL all the way through to production, you would be stupid to not to lock in a GOOD PRICE up front, considering everything that can happen between now and then. As they say, one bird in the hand is worth more than two in the bush.