This is another apparently simple question with several...

This is another apparently simple question with several possible answers, to be balanced against each other, as we just don’t know how much weight to give to each of RG’s potential motives. He has more than enough cash to make a bid at any time, so that’s not a factor- it comes down to a purely tactical analysis.

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I discussed this today with another shareholder. It’s (mainly) a mixture of ego and greed. His fight with the TIC founders who have over half of the 12% minority may also influence his moves, but I can’t guess how or when. Strictly speaking that’s irrelevant to takeover considerations but RG may feel that he can use it as a bargaining chip. That trial has been delayed until late 25 or even 26.

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In coming years PGH should be doing very well and earning greater returns thanks to the large capex invested in recent years. On the FY24 results today’s price is a PE of only 6.5x underlying eps, which is very cheap. I would hope that PGH can make at least 10% pa growth on that, as a long term trend: that’s not a forecast! I.e. PGH is cheap already and will look even cheaper in future. The longer he leaves it to takeout the last 12% the more it will cost him. There could be an element of pride, that he may not want to make a bid yet as it might emphasise a view that he failed in his 23/4 takeover, with only 88%. That is probably a lesser point. Also, once PGH is delisted it will get less media attention so if a second bid comes it should get little press comment.

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The best reason for RG to wait is that if he bids after PGH is delisted that should bring two financial benefits. Some holders may panic (or some holders may have to sell e.g. if their SMSF rules don’t allow them to hold unlisted shares. If there are still some institutions left at PGH- and I think there may be one- they may also be forced to sell if their mandate doesn’t allow them to hold unlisted assets.) However, I would be surprised if even 7m shares (2%) fall into these categories. If he could pick up that many and save himself say $1 per share or more v an eventual takeover that might be worth up to $7m-which is nice to have but not a big deal for a man worth $1.5B.

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The bigger advantage is that if a bid is made when PGH is delisted it is harder for holders to get a context on what is a fair price, and to see in real time how share prices react to a bid. The big shareholders can talk to each other, but that’s not practical for the 1500 smaller holders. Since RG is both a director and holds over 30% ASIC guidelines would require PGH to get an independent expert report if RG makes a bid. However, we saw from the Kroll fiasco in the first bid that the expert may not do a good job and can’t be assume to support a high or even an adequate value.

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If RG made a bid now, he might be able to run it before the FY25 results are posted in late August; if these are likely to be good it would be better for him to finish a bid before those numbers were published. But if he wants to bid while PGH is still listed, and get it finished before 31/8, it may already be too late.

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In summary no one really knows but all the above matters would benefit RG, even if not by a big amount, if he waited until after delisting. He has nothing to lose by delisting and stands to gain something –perhaps a lot- by waiting, even if not as much as he might hope. Conversely, I don’t expect him to wait 3+ years because by then PGH should be much more valuable. Of course, he might never make a second bid, and stick at 88%, but I think that is extremely unlikely. What I am sure about is that the PGH Board's stated reasons for delisting are garbage!

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Not advice.