defensive takeover strategies

There has been many claims, without any justification, why ESG could be taken over at +40% of their VWAP. Has it ever been explained exactly HOW this would happen?

All the takeovers in this sector have happened on a price per GJ basis - by putting a price on the resources and reserves, not in relation to what price the company was trading at prior to acquisition. Clearly, shorting has been rife in past takeovers, as it has with ESG and BOW. So the starting prices are arbitrary. What matters is how much gas is there, and how many people want and need it.

But have a think about ESG's strategy. They don't say very much. Have ESG, for the last 2 years, been sitting around, just waiting for the takeover from Santos or Origin? Speaking to no other interested parties who are short of gas. Just sitting around, passively, waiting for inevitable coup de grace from Santos? The idea is laughable.

Do ESG appear to be a company desperate to talk their price up? Because if takeovers did happen at a +40% premium, wouldn't it be a good idea to talk your price up?

But, of course, ESG haven't been talking their price up. They are secure.

Would ESG directors accept a lowball offer? Of course not. Would large holders like Morton and Battersby? No. So the claims that a predator could get control of ESG by force and at a low price are utterly fallacious.

So, if someone were to lob a low ball bid, what could ESG do?

Well, during the last 2 years, they might have had discussions with other large companies with spare cash who are looking for a very good return in a short space of time. ESG shows this company all the data, explains what their target price is, and provides an idea of the sorts of companies who might want to takeover ESG. Then, in the event of a lowball and hostile bid, this company acts as a 'spoiler'. The spoiler buys ESG stock on the market, above the bid price. So no one sells out to the hostile bidder, because there is a better offer on the market. So, the 'spoiler' then accumulates a nice blocking stake, making even harder for the predator to get control. Or, the predator has to RAISE their offer price, so that it can outprice the spoiler accumulating shares.

But either way, it is impossible to get control of the company at a lowball price.

So, for the spoiler, it is a win because they get a very nice return on investment in a short space of time, as the predator has to pay them 'go away' money. Or, they secure a nice blocking stake in an underpriced company with high strategic value, and a buyer still has to get through them to secure the asset. And for ESG, they get to ensure that a lowball bid can't be successful.

And of course, this is without another players bidding for ESG. Another bidder for ESG guarantees a high price. We, of course, will see...

Dig a little deeper on this notion of how could a hostile takeover would work. Think about various defensive strategies that can be emplyed (I have just mentioned a couple). And this fiction of a successful +40% VWAP takeover is found to be just that - a fiction.

Yaq