Ann: SRX BOARD RECOMMENDS ACQUISITION BY VARIAN MEDICAL SYSTEMS, page-90

'You have to assume the ones who were holding before the announcement got badly burned. The new ones can safely bet that the takeover won't complete. They'll only get hurt if there is a better offer.'

Whytee is spot on - let me explain in a little more detail.

There are 3 outcomes in shorting the stock.
A) The bid goes ahead and the shorts loose 50c a share - this is the punt money.
B) The bid falls over and the SP drops, say, $4 or $5. The shorts are big winners.
C) There is a higher bid. Probably unlikely but if so may not be much above $28. Maybe $29.50 or $30. The shorts are stuffed for $15, or $2 a share.

So what are the probabilities of each scenario?
A maybe be 80 / 85%
B maybe 10%
C maybe 5 - 10%

On these numbers one would not short, but if there is a big punter out there that thinks B is a 20%, and C only 5%, then it could be a worthwhile punt.

The above numbers are only for illustration, but I'm sure you can see why someone may have a big bet.

The other reason is this. Maybe you are Bruce Gray and son and have 6m shares and for some reason you can't offload because you think there may be another bidder, but at the same time you need to protect against the bid falling over - you short the stock as protection.

I'm sure there are other reasons. I'd not read too much into the short positions.