I agree. RMS is great value if they succeed at getting control.
Interesting situation, because there is no minimum acceptance, whatever shares are sold into the offer will represent RMS’s new holding in EXU.
Once the formal offer is sent to shareholders the offer will become a little clearer, but at this stage there is not much difference between this script offer and a on market cash offer, other that the price of the offer is floating with the share price of RMS shares. ie once the formal offer document arrives there is nothing stopping people in the market from selling into the offer and buying more EXU shares on market (during the offer period) to also sell into offer. Anyone serious about taking advantage of the arbitrage opportunity would be buying puts on RMS (ie getting sliding short options on RMS) while buying and selling into the gap, as long as the sliding put covers their position if the RMS price falls.
The bet is about as good as where you think the value of RMS is now. To me RMS is not wildly overvalued for the long run, so not a huge risk buying EXU at 10.5cents IMO. Only risk as mentioned IMO, is if RMS’s offer gets stuck short of controlling EXU’s board IMO and general further downside gold price and gold sentiment risk. Esh
EXU Price at posting:
10.5¢ Sentiment: Buy Disclosure: Not Held
