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Bullabulling – no need to shout!
BY BEN TURNEY — WEDNESDAY 30 APRIL 2014

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

I’m always amused by people who resort to use of uppercase letters when trying to get their point across in the written word. It makes for very shouty reading and is stylistically moronic. So it was with a good deal of mirth this morning that I read Bullabulling’s (BGL) response to Norton Gold Fields A$0.07 a share takeover bid. In case you missed it there are one or two hints that Bullabulling’s board DO NOT (!!!!!!) want shareholders to accept Norton’s offer.

I don’t know why Bullabulling’s board chose to release such a dramatic RNS. It actually made some very good points and anyone who has read Norton’s offer will probably agree that it is INADEQUATE and OPPORTUNISTIC. There really was no need to shout about it.

Excessive use of caps usually betrays an underlying lack of self-confidence. If you trust that people will listen to you and take you seriously why try to force your point upon them?

Perhaps Bullabulling’s board feels a little insecure. After all the Bullabulling Gold Project hasn’t exactly progressed with the greatest of speed. Concerns about the funding of the business and executive remuneration abound, but Norton’s offer still looks miserly.

It is true that the A$0.07 a share bid on April 17th was at 30% premium to the previous closing price, but I don’t expect it to succeed. Bullabulling’s board believes it has support of 41.8% of shareholders in thwarting Norton, but, for me, the real clue has been the relative lack of volume in trading of Bullabulling shares in the last two weeks. There hasn’t been much indication of a rush for the exit, as Bullabulling’s stock trades at or above Norton’s bid price. Overnight, Bullabulling closed at $0.075 on the ASX.

In its initial bid statement Norton claimed that their offer was “32% [above] the 3 month volume weighted average price to 17 April 2014” and represented a “premium of 77% over the prices at which Bullabulling has recently issued shares to senior executives as bonuses for 2013”. The first point is not likely to curry much favour with shareholders, but the second might strike a chord if Norton increases their offer. If Norton’s board hope this message will play on shareholder discontent they will probably find they have misjudged the mood.

As tough as the last two years have been for Bullabulling’s shareholders, those who have chosen to remain in the stock are unlikely to give up on the basis of the terms offered. Last summer, at the nadir of the gold crash, Bullabulling went as low as A$0.02 a share. Had Norton swept in with an offer of A$0.07 a share then, they probably would have found exasperated shareholders falling over themselves to accept.

Today, with signs of improvement in the gold market, Norton’s low-ball bid looks doomed to failure. Whether this turns out to be an opening salvo of a longer campaign remains to be seen, but I wouldn’t be at all surprised to see Norton return with a higher bid.

At that point Bullabulling’s board might have serious cause for concern.

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