Not a holder. Just trying to make sense of takeovers or ones that dont go ahead and why.
Probably a good thing in the long term for holders as the Chinese seem pretty tight with their bidding.
Shareholders perplexed as suitors abandon Rocklands
CLANCY YEATES
February 4, 2010
Shareholders in Rocklands Richfield are asking questions of management's curious handling of takeover approaches, after the collapse of a three-way bidding war between elusive Chinese and Indian suitors.
The coal and coke producer's shares plummeted 25 per cent yesterday after it said Jindal Steel and Power, an Indian company, would not go ahead with a 56c-a-share takeover proposal, sending the stock to a seven-month low of 22c.
It was far cry from four weeks ago, when its shares soared to 45.5c as Jindal and a rival Chinese group, Meijin, appeared to be frantically competing to buy the company.
Now both bidders seem to have walked away from Rocklands, following in the footsteps of a third potential buyer, Essar, an Indian company that abandoned a bid last year. Reeling from a plunge that has seen its market capitalisation more than halve in four weeks, investors are asking if the company's management did all it could to keep shareholders informed during the murky bidding war of the past few months. The Rocklands takeover saga began last September, when its biggest shareholder and director Benny Wu agreed to sell his 9.9 per cent stake to a non-binding Jindal approach, at 42c a share. Another non-binding takeover bid soon followed from India's Essar, who raised the stakes to 50c.
Soon after, another Rocklands director, Kwang Hou Hung, sold $2.9 million worth of shares at 42.5c as he quit the company, just days before the rival Essar bid collapsed on October 20. Jindal's non-binding offer remained, however, and things heated up another notch in November and December when Meijin started a bidding war, offering 52c a share and then 56c a share for Rocklands.
Market excitement grew, but details of the non-binding approa-ches were scant, leaving the target's share price dwindling below the bids. There were, however, clues that this was no normal takeover stoush. In late December Jindal took the bizarre step of selling Rocklands shares that it had started buying on market, a very unusual move when the takeover was supposedly still on foot. Stock exchange announcements show it sold more than 4 million Rocklands shares on to the market between December 15 and January 5, a period in which it was looking to buy the company.
And when the terms of the Jindal deal were finally revealed in the final days of last year, they contained conditions one market source described as ''nonsense''.
Among the most curious conditions was a requirement that Jindal gain operational control of Rocklands' coking assets in China if its stake in the target reached 19 per cent. Just as strange was a condition to issue stock to Jindal at 42c a share, compared with its 56c-a-share bid.
''Why should they get control of the main operating asset if they only have 19 per cent?'' said one perplexed market source. ''Why would you issue them with stock at 42c when they're making a bid at 56c?''
Moreover, questions were being asked about what steps the board took to make sure Jindal was serious about the bid, when the acquirer was busily selling its stock.
Rocklands' chief executive, John Girdlestone, did not return BusinessDay's calls yesterday and it is not clear what has happened to the Meijin bid. The perilous plunge in Rocklands' share price suggests the market has doubts about any of the approaches.
In a statement to the market, Mr Wu said talking to Jindal was no longer in shareholders interests: ''RCI [Rocklands] is disappointed that the negotiations with Jindal have not resulted in RCI being in a position where it is able to submit to its shareholders a formal takeover proposal.''
