I am a long term holder of HMX.
If there really is a merger between equals, then the old HMX shareholders andthe old CNB shareholders should not have to suffer any disadvantages. Thismeans that the value of your shares in the portfolio would have to remain thesame in absolute terms after the transaction.
Actually, there would then have to be a new company - e.g. with a new name andthe shareholders would then receive a corresponding number of the new shares.The value of these shares (e.g. 50k) would have to be the same after the mergerunder equals as before the transaction.
The crux of the matter is that you first have to determine the value of thetwo companies. And both must agree that this value is also fair. Inother words, the current market cap does not necessarily have to correspond tothe value of HMX or CNB.
In fact, both HMX and CNB could be undervalued or overvalued. This, of course,has a major impact on the starting point for negotiations or the conclusion ofsuch a transaction. There is therefore no guarantee that a deal will actuallybe concluded.
This in turn means that there is a risk that the existing shareholders of HMX,for example, will walk away as "losers" (or as winners). This is thecase if the HMX package is priced too low or too high.
If we were to take the market cap as the starting point, the calculationwould be simpler. But THAT is unlikely to be the case.
So the question is how CNB, for example, calculates the benefits of gettingfree access to Mt. Hope plus the exploration potential around thecurrent boundaries. This may also be the case for other tenements.
Then HMX can ask itself how Kalman should be valued - because in HMX's currentmarket cap, Kalman is non-existent in my view.
None of this makes it easy.
In the end, of course, a merger that frees up synergies usually adds up tomore than 1+1 = 2.
HMX and CNB currently have a combined market cap of around A$ 140m. If weassume that a combined company could go "into production", then themarket cap could multiply.So the question is whether a merger will actuallyunlock this synergy.
From HMX's point of view, one could also ask oneself whether one could simplysell a few areas around Mt. Hope to raise cash - for further drilling campaignsand remain "independent". From CNB's point of view, you could askyourself whether you can get these tenements more cheaply if you complete amerger.
My enthusiasm is currently limited. I have seen and experienced toooften that existing shareholders of one of the two companies have walked awayas losers. It remains to be seen how the market, the media and therepresentatives of HMX and CNB react to all this.
It remains to be seen whether the 2 managements will treat us fairly this time.
Then I agree with Eastwest. A merger would make a lot of sense. The onlyquestion is what access to Mt. Hope is worth to CNB.
And it remains a fact that the SP of HMX was pushed down in order to worsen theinitial situation of such a merger for HMX shareholders. This is of course just an assumption from my side - but rather obvious - it could have been a third party BECAUSE I think that CNB's SP is also too low.
Either way -nobody can avoid the over 50% long term holders of HMX. Therefore, I amskeptical that this baby will fly without the HMX shareholders interests being"considered" accordingly or at least to a certain extent. DYOR
Share
Share
Share
Share
(20min delay)