What the next step for GEM? Either (a) GEM raise the offer to 90 cents or at most a few cents more (if allowable -- they already made their "final offer"), or (b) GEM will walk away with a 28.5% profit from Perpetual's former shares and possibly others since then. This situation is parallel to APA's attempted acquisition of Envestra (ENV) last year. In that case, the market was happy that APA walked away.
Whether GEM should walk away or (if allowed) offer 90 cents or more for AFJ is isn't easy to calculate because of the qualitative factors I identified yesterday (such as the value added of removing a competitor in the childcare acquisition market). If GEM does make another offer, I doubt it would be much more than 90 cents because, unlike the alternative, GEM offers continuity of investment with likely gains as well as deferral (if any!) of AFJ capital gains.
GEM Price at posting:
$3.20 Sentiment: None Disclosure: Held
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