joint venture, page-45

While takover talk is a good old tactic to pump tht share price up we should all know by now SSN share price isn't going to move up on such talk. Since this speculation has been around longer than most shareholders it's probably time to face some facts about the short term probability of this happening.

Firstly there is a persistant question of why CHK purchased some of our land rather than buying the whole of SSN for a cheaper price. The answer to this is really quite simple. You can't just put in a buy order for 2 billion SSN shares and options and pick them all up for current market price. Buying them all on market would take forever and the share price would rocket as soon as shareholders knew what you were doing. Market price often has absolutely nothing to do with the cost of buying a company in a takeover.

To perform a takeover you usually have to get commitments from several of the largest shareholders before going public with your offer. This ensures that one or two large holders don't king hit with by blocking the deal later on, wasting a lot of time and money. Large holders are going to want a big premium just like the rest of us and it only takes one big holder to push too hard for too much and the deal never gets off the ground.

CHK may have spoken to the top few holders and run the numbers only to find that they couldn't get an offer off the ground. It may have been that the premium was too high or that somebody had a blocking stake (10%) and simply said that we will support a sale of some assets, maybe a JV, but still wanted exposure to the huge potential upside so wouldn't accept an offer for their shares.

The share price is much higher now than before the land sale was announced, our income is more, we have less debt and bucket loads of cash. We are much closer than ever to finding out what riches we are sitting on. If the parameters for a sucessful takeover deal weren't met earlier this year then I find it unlikely that they are any better now.

The fear expressed that somebody is acquiring a massive stake and will takeover SSN by stealth is probably a little unfounded. More stock maybe moving into ADRs however as expressed by quite a few people substancial shareholder notices will give us a heads up when somebody new gets to 5%. Remember that 5% is a drop in the ocean as far a control or completing a takeover is concerned. Nobody is going to sneak up and take this from us.

If I'm wrong and somebody wants to sneak up and offer 48c per share (being half way to TBs previously quoted 96c) then I won't be considering them hostile, I'll call them my new best friend.