Ann: DDH1 and Perenti Scheme Implementation Agreement, page-39

Been touted as a good deal for Perenti, but I'm not convinced on the value proposition for DDH shareholders for this transaction.

PRN using predominantly scrip near two year highs as consideration, and the market reaction has almost entirely wiped out any implied premium for control - undisturbed share price was $0.86 vs implied value of $0.913 with PRN at $1.11 for a 6% premium. One of the downsides of using scrip instead of cash.

For the current 6% premium, DDH shareholders get increased geographic risk, increased leverage risk, higher capital intensity, lower ROA, and lower EBITA margins. The main synergies available are through tax based on offsetting DDH profits against PRN losses in their Australian division (sounds like a successful business!), of which only 30% accrue to DDH holders post completion.

Only took two weeks between signing a confidentiality agreement to a binding deed so PRN clearly know how good a deal they're getting. Shame Oaktree looking for an exit is driving this but going it alone hardly looks like the worst option based on what's currently tabled.