Might be just an investor betting on what GMD will have to pay for the rest of DCN.
It is not me, but my take is:
1. GMD will have to get the rest of DCN, and for cash not shares. Unless RED trips over, which seems unlikely, RED is not an alternative target. KIN is not the cheap target it appears, because of Delphi, and in any case Kin has no mill.
2. What will GMD have to pay to own DCN outright? Any new takeover has to get over 90% of all shares, AND over 75% of the outstanding shares at the time of the takeover. This suggests GMD will try to get the shares controlled by Delphi (10%) and half of the remaining 10% in one cash offer. If they got the Delphi shares first, then mounted a TO offer after another 4 monts they would have to get 3/4 of the last 10%, i.e 97.5% before compulsory purchase of the dregs. My guess is there will be some "over my dead body" shareholders in that last 5%, so they will have to choose option A.
3. It is not Kin who controls 10%, it is Delphi, a private investor with apparently deep pockets and much patience demonstrated in the past. If Kin is distressed, for example because it can't get a milling solution, then Kin has to raise money, Delphi is the only shareholder who steps up, and Delphi gets to own more and more of Kin. In other words squeezing Kin only strengthens Delphi. GMD will not get a bargain for the last 20% of DCN because of Delphi. Private investors (Delphi) have no shareholder pressure to produce results quickly. GMD does have to start making money sooner rather than later.
4. The last 20% of DCN is going to cost GMD around 60 to 100 million IMHO. So .30 to .50. There are very few DCN shares on the market, so buying will push the price up easily, but if the above is true there is a lot of room to pay more than .12 cents. On the volumes we are seeing it could be just a single investor making that bet.
DCN Price at posting:
12.0¢ Sentiment: Hold Disclosure: Held
