Just a scenario:
If a merger of equals occurs, the public float remaining would possibly not be enough to prevent a forced privatisation.
Imagine if the price ends up being Vodafone offering, say $8/sh, and Teoh & SPT accepts the deal with an option to sell at the offer price that lasts 12 months, but the condition is he gets one seat on the board and Voda the rest. Merged entity has Teoh holding 16%, SPT 12.5%, Voda 25%, Hutch 25% and the public 21.5%. Some number of the general public will likely sell into the Voda offer bringing the public float under 20%, maybe under 10%.
After the deal closes, they announce Teoh is leaving executive duties and will just be a board member, and Voda will appoint management.
All of a sudden, no effective cost cutting and share price tanks to $4.50. Voda then exercises it's rights to privatise (and likely) compulsorily acquire the last 10% at $5.50/share or similar as a "gift" to small investors.
I'm just saying be cautious around this deal. The very large holdings of each of the main players make this more complicated than a deal where the general public owns the vast majority of shares and needs to agree. Tread carefully.
I actually think it is a smart business deal, but I can see risk for small investors here. I would like to see statements about the desire to keep the business public, and maybe a small cap raise at the offer price to expand the float to de-risk for small investors.
It would suck to be left with just a stub left on the ASX, as it would be vulnerable to delisting at any downswing.
Expand
