Not much to go on! Morning Star 'fair value':
ORE = $8.61
GXY = $5.36
Based on Friday's price $9.51, ORE is over-priced.
JPMorgan Aug10 values:
ORE = $10.90
GXY = $6.20
(56.9% of $10.90 = $6.20) - approx!
I think JPMorgan came up with a value for ORE factoring in GXY. Then they calculated the price for GXY based on the insuing share exchange.
The "merger" was announced around April19.
FROM THAT DAY ON, IT SHOULD BE ILLEGAL FOR ANY 'PROFESSIONAL VALUATION' TO BE PUBLISHED.
In this instance, JPMorgan made a mess by publishing valuations after the merger was announced. Anyway, who vets their calculations and what are such figures based upon? As I witnessed, such announcements open the market to dreadful manipulation. (which brokers can also provide benefit for their own clients).
Further - IMO - this is NOT a merger. ORE is acquiring/taking-over GXY. "Mergco" or any other name is nothing but a Mask!
I've also said before, GXY's SP is dependent upon the price of ORE (Friday close, ORE $9.51 which should put GXY at $5.41) - close to 56.9%.
IMO on Monday, ORE will be driven down (shorted), 'panic' will then set in and GXY will be the victim.
Once trading resumes, ORE's lower price will be more 'accessible' (briefly) to the general punter. (assuming "Mergco" doesn't first announce a new book value).
If I'm wrong about Monday, a price increase could be driven by people wanting to get on board before the SP increases upon the acquisition is completed.
Ideally, the 2 companies could announce a 'cease to trading' on Monday. Not too late for the ASX to announce a hault before the open.
Further to this, the court's final rulings were announced after the close of trade on Friday and IMO the companies process of acquisition can commence and a halt put in place immediately. (as is usually the case).
As to the final SP, that has been left to the market. Not how things are usually done!
Consider, if $5.41 is a 'fair price' for GXY, then offers should include a premium of 30% and upwards. (over $7 p/s). Therefore, are GXY shareholders getting value for money?
What is the EOFY book value of ORE.
From this perspective, I don't see the GXY board as having acted in the best interests of its shareholders.
Especially as April was too early for financials relating to an August acquisition.
Time-out!
