Consider that you are the CEO of a major gas company in NSW. One day you wake-up and realise that a minion in the industry controls adequate resource to be able to materially influence the price of gas in the future and you will not be able to do anything about it.
Now consider, that you have only one other major competitor, and both of you have invested heavily on infrastructure. Then bang, enter the little player, all your plans of certain future prices are not so certain. What do you do in order to mitigate this potential and real risk?
The most logical mitigant is to eat-up the small player while you can. The key here is to pay as little as possible for the acquisition. The best time to do this is when there is little or no score on the board. MPo's situ at the moment is similar in nature, only a small proportion of resource proved so far but everyone is aware of the potential.
Now if you were mpo/ajl management then you would look to ensure max value for your resource. If someone did approach you for a buyout then you will make sure there is some form of leak to the mkt so that punters take a position and drive-up the share price (aka RIO strategy with BHP bid at the start). This puts you in a better bargaining position and gives you a lever to negotiate a better takeover price.
In simple terms, my reasoning is similar to the above. I strongly believe that insiders do have the information and this is what is a major factor in driving the sp up.
IMHO, I would not be surprised if a bid comes in before end march 2008 and i am serious.
MPO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
