I think Hanlong still wants this deal to go ahead, reasons being:
- Could have exited when the 40c bid was rejected, or have CDB reject the initial finance approval.
- Whilst Merril's was behind the lower bid, It wouldn't be in their best interests for this deal to fall over (no success fee).
- $14m break fee and the loss on investment, for nothing.
- Reputation (face) is important to the Chinese. While this deal has been a disaster, the Chinese haven't actually reneged on deals in the past (binding offer/post DD stage). If the deal fails, ASIC and the FIRB will be investigating this. I don't think the Chinese (from a national perspective) would want to risk the prospect of restricted investment in the future because of this. Especially if they got nothing in return.
Overall, I just don't think the Chinese will let this one go given effort,potential losses and the potential for increased restrictions in the future.
SDL Price at posting:
39.0¢ Sentiment: Hold Disclosure: Held
