I made an inquiry the other day to the ASX and got a reply this afternoon. This was it. Hope it answers some peoples questions.
Cheers
Thankyou for your email regarding the trading activity in Hardman Resources Ltd (HDR) following the takeover offer made by Tullow.
Once a takeover offer has been formalised and been announced to the market, the bidder (in this case Tullow) would specify whether or not the offer is off market or on market. In the case of Hardman Resources the offer made is a scheme of arrangement which acts like an off market transaction. Given this, Tullow is unable to purchase HDR stock on market particularly at a price different from the offer price announced in the bidder and target statements as this would be in direct contravention of the takeover provisions outlined in the Corporations Act. Specifically, the Corporations Act stipulates all those shareholders who accept a particular offer must receive the same offer price.
The trading activity to which you refer is known as takeover arbitrage and is quite common following a takeover announcement. It is a strategy that traders and hedge funds often employ and involves purchasing the security with the expectation that the share price will rise following a further and increased offer from another party.
I trust this information is useful to you.
If you have any further enquiries, please do not hesitate to contact me at ASX Customer Service on 131 279.
HDR
hardman resources limited
