This is Mr Lincoln Augustus, first second cousin of...

This is Mr Lincoln Augustus, first second cousin of Holymagiman.


Just thought that I would post you this from today's Sydney Morning Herald newspaper.

This is to remind you all how vital your vote is for this stupendous, most magnificent, once in a life time deal that our most honourable Sapex Board has managed tp procure for all of us.

Don't forget to vote, as your vote will be very important in deciding whether this wonderful merger deal done by our most honourable Sapex Board gets over the line.

Yours etc., etc.,
MLA





True colours for this takeover
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• Ian Verrender
• June 26, 2008
• Page 1 of 2
At last, a good old-fashioned takeover stoush. You know, the sort where one chief executive accuses his nemesis of lies and deceit and the other dismisses the aggressor as a desperate wannabe.
For years, Australian shareholders have been forced to endure "friendly mergers", where their directors - after a polite period of time in negotiations behind locked doors - recommend offers that are then put to the vote. In most cases, shareholders merely vote along with the recommendations.
Interestingly, it has taken the British of all people to throw aside the niceties, and the gloves, and come out swinging.
Perhaps they have been basking in the glory of winning two out of the past three rugby world cup tournaments - while Australia has won zip.
But BG's $13.5 billion hostile takeover for Origin Energy - regardless of the price - is a welcome relief for Australian shareholders. For once, the shareholders will get the chance to decide for themselves on the merits of the takeover.
For most of the past decade, most takeovers here have been decided by what is known as a "scheme of arrangement".
And for most of the past decade, that mechanism has been abused by corporations, largely to the detriment of shareholders.
These schemes were introduced to aid mergers of like-minded companies where joining forces would make good strategic sense for both operations.
Take, for instance, two companies with mining prospects side by side. Both may need a transport link to the coast, and rather than doubling up on the infrastructure, the companies may decide it would be in the interests of all their shareholders to join forces, merge their operations and build one rail link instead of two.
To help this process along, our corporate regulators lowered the bar for the shareholder approval.
In a hostile takeover bid, the bidding company must receive the nod from shareholders owning more than 90 per cent of the stock in the target company.
Under a scheme, you need only get half the target shareholders holding 75 per cent of the stock. And that's done via a vote, rather than just through buying power.
You don't need to be a rocket scientist to figure out what happened next.
Investment bankers are paid large amounts of money to sniff out a loophole - and this had a pungent, earthy aroma. Before you knew it, takeovers were being dressed up as mergers.
The first to really hit the headlines was Xstrata's 2003 takeover bid for MIM Holdings, orchestrated via a scheme of arrangement.
The MIM board acquiesced to the $3.4 billion deal, fearing it might be accused of knocking back a decent offer for a chronic underperformer.
But it created a furore in Queensland, and even the MIM chief executive, Vince Gauci, went on the warpath against his own board, accusing the directors of selling out on the cheap. He was right, of course. Metal prices have risen enormously since and the deal was a company maker for Xstrata.
Even with the board's endorsement, the deal only just scraped over the line. Had it been a normal hostile takeover, requiring 90 per cent of the shares, it would never have made it and MIM shareholders would be much richer.
MIM was a watershed.
Now everyone eyeing a takeover target approaches the board and argues for a "friendly" deal.
The reason is they don't want to risk paying huge amounts of money without getting absolute control. If you end up with less than 90 per cent in a hostile bid, you don't get access to the cash flow. So your takeover target becomes a subsidiary with its own separate head office and stock exchange listing - and all the costs associated with that.
BG went down the "friendly" path, offering $15.50 a share. Origin's Grant King was poised, pen in hand, to sign on the dotted line. And why not? The offer was well above the already generous offer previously made by BG and about 50 per cent above Origin's share price a few months ago, before the bid was made.
But soaring energy prices and an international focus on Queensland's coal-seam methane gas deposits prompted him to jump off at Redfern, as they say in merchant banking circles.
The British this week have come back with a hostile offer at the same price. And talk about hostile. They have accused Origin of rubbery numbers on its gas resources. Oddly enough, they weren't disputing those numbers a couple of weeks back.
It is now up to King and his board to convince shareholders that the gas is there and that it is worth more than BG is offering. And for once, shareholders will decide.