hanlong - what would you do?

I think many of us have been trying to look at this the wrong way, when trying to work out what Hanlong's next move is going to be.

Most of you know SDL like the back of your hand, but if you were in control of Hanlong, and you were considering your next move to secure SDL for as cheap as you can, after making an offer of 50c plus conditions and getting knocked back, what would you do?

The first thing I would do, is use the current market conditions to your advantage. There is a lot of fear and uncertainty across the world at the moment, especially in the share market, and if you didn't try and capitalize on this, you would be an fool. As I see it, Hanlong have 5 options:

A) Walk away completely (Highly Doubtful)

B) Threaten to walk away by lowering the offer (Unlikely)

C) Keep the existing offer on the table, in the hope that SDL shareholders get desperate and panic (possible)

D)Dangle a carrot, by improving the current offer slightly which will make it appear very attractive to desperate and scared shareholder (Likely)

E) Bow to the pressure of the board, and offer them what they want (Highly Doubtful in these conditions)


If you were in charge of Hanlong, what would be your next move?

Assuming you select D), maybe you did, maybe you didn't, what would your offer be if you were in charge? The offers I would consider making would include:

1. Same offer of 50c, but with less conditions

2. Slightly higher offer of 55c, with or without less conditions

3. More generous offer of 60c, with same conditions.

One of them, would be my next move, even though I know that the board is likely to recommend against it. I would then apply the following levels of pressure to SDL to force them into agreeing:

- I would go straight to the Cameroon President, and tell him that the SDL Board are the ones holding things up, and that if SDL just say yes, finance is sorted and the project will begin straight away. I would also add that the SDL board are just being greedy to benefit Australian shareholders and that this deal would strengthen the Cameroon / China relationship. Heck, I might even throw some sort of sweetener in there for him and his wife too.

- I would then speak to the China Government, and tell them that it is crazy for all of us Chinese companies to try and outbid one another and drive up the price. Why don't we just remove the other Chinese parties out of the equation, then once we get it for as low as possible, we work out a deal with one another, whether it be JV or cheaper ore.

- I would then speak to the other Chinese companies to make sure that they were on board.

- I would speak to other companies and get them to purchase shares in SDL, in order to lock in more votes.

- I would then tell the SDL board, that we have got the Cameroon President on board along with the Chinese companies that they are negotiating with and would also add that we now influence more than just our 18% vote. I would also threaten to use Hanlong's 18% stake to try block any other deal even if it was to the detriment to the original $200 million stake.

- I might also offer a sweetener in there for the SDL Board and Staff to cause less fuss. Agree to keep them on, pay them out, possible options in the new project, whatever.

- As for applying pressure to individual shareholders to accept the offer, there is no need, because the world economy is doing that for them, and in return, the share holders, will then place this pressure on the SDL board in order to come up with a solution.

Anyway they are just my thoughts on what I would do if I was in charge at Hanlong and my goal was to secure SDL for as cheap as possible.

And before anyone suggests that I actually work for Hanlong, maybe I do or maybe I am just trying to see it from their perspective.