re: Ann: Notice of Variation of Offer - Exten... Thanks Zia, as a long time holder I remember you and I know you did your best to research SBL and believed they had potential. If I had my time again I probably would have exited when you and many others did, as we’ve gone nowhere in 6 months and the uncertainty keeps on keeping on. (Actually I would have exited with the March 2011 CR, but we live and learn).
To be honest SBL/Infiniti/LG has tested me all the way and I’m learning as I go. Even in tonight’s announcement we’ve seen if they don’t like any terms or conditions they just strike them out and rewrite them to suit themselves and the changing circumstances.
As we’ve seen it’s taken an intelligent Director 5 Bidder Statements to realise he had a potential conflict of interest. In fairness at least he finally said something – unlike our new Chairman!
Really what hope do we have of ever being fully informed?
It's getting late but in this situation my best take on ‘not being subject to minimum acceptance condition’ is as follows …
LG ideally wants to acquire 100% of SBL. In the past gaining 90% of targeted acceptances would normally allow LG to move to compulsory acquisition. However, LG’s offer is still conditional on several matters and subject to revision. As well many shareholders believe the current offer is lame and simply intend to reject it (lets call them disgruntled shareholders). We also have Weiss with either a blocking stake or acting as a trojan or proxy of LG.
Ideally LG needs the acceptances of the disgruntled shareholders and Weiss to ensure they can reach the 90% threshold, but really LG know their current offer is below par, so they waive the minimum acceptance criteria and hope that acceptances come in anyway, without the pressure of us all focusing on the 90% threshold. It’s almost a form of reverse psychology and they want to test how far they can get.
In an ideal world their no minimum acceptance condition coupled with the Bid Implementation Agreements with Directors was intended to speed up the takeover, by avoiding a stalemate with the disgruntled shareholders. In reality we can all see that seems to have totally backfired to date and they won’t get anywhere near 90%, so they may well settle for something that gives them effective control in the interim, by virtue of having the largest shareholding when the offer closes.
The first 5 paragraphs of the following link give a very good outline of what LG in essence are trying to do …
http://www.findlaw.com.au/articles/934/overcoming-shareholder-inertia-in-takeovers.aspx
As an aside a really good insight into a successful 100% takeover was Rio Tinto’s takeover of Riversdale. In the end they waived the minimum acceptance condition and used that manoeuvre to outfox the two biggest shareholders who originally had blocking stakes. It’s a short read and quite informative.
http://www.minterellison.com/pub/nl/201109_maa/
I’m sure there’s plenty of other examples but hopefully that will do for now.
Btw – Highopes I loved the Sergeant Shultz comment.
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