The reality is that it is often challenging for boards to not recommend takeover offers that carry on the face of it a significant share price premium over recent trading levels, especially for a greenfield resource play like UMC which is inherently exposed to development risks (although the CRM deal would have provided a significant degree of certainty on off-take and funding) and commodity price risks (albeit in a recovering demand and price environment). All in all, it is a tough decision for the board and it is generally safer for them to recommend an offer which crystalises value for shareholders now. In a way, their hands are tied.
Does that mean I think that the BHP offer is fair and reasonable? On the information that has been provided so far, the answer is no, and I do not intend to accept the current offer from BHP. However, one area that is not clear is the restructuring and disposal of assets other than those which relate to the Railway deposit. This could potentially involve the distribution of sale proceeds (from the sale of eg. bauxite JV and other regional iron ore exploration tenements) and surplus cash to shareholders prior to the merger taking effect, which would increase the returns to shareholders. All will be revealed in the scheme docs.
In the mean time, what can we shareholders do? Not much except sit tight and hope for another offer to materialise. Scheme docs relating to the merger will be issued in due course (probably in a couple of weeks time) and a shareholder vote will be called for some weeks later, so there is time. If you truly believe in the long-term value of the company as a stand-alone entity (as I do), you can of course vote against the scheme when the time comes.
I would not rule out CRM as a potential bidder although the spate of recent Chinese acquisitions being rejected by FIRB gives me less comfort (UMC is relatively small but highly strategic... maybe they can team up with another Aussie player).
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