This is as boring as bat-shit ... waiting, waiting, nothing but...

This is as boring as bat-shit ... waiting, waiting, nothing but waiting.

Out of shear boredom I am close to throwing in the towel and selling my shares. I would sell on-market of course ... not into the bid. If you haven't sold into the bid yet, why on earth would you now??? If you need the money then sell on market - there is still an appetite, from traders presumably, for shares around $1.38 - better than the $1.35 you get from the bid (unless Cephalon get 90% which is unlikely because they are barely getting 1% a week at the moment).

HOWEVER, just typing this post has revived my digust at Cephalon's ridiculous attempt to diddle me out of my hard earned investment. If I sell on market, then some hedge fund is going to make the further profit I am waiting for ... bring on the revised bid and hurry up and offer $2 already!

In an effort to determine the likelyhood and timing of a revised offer, I have been thinking more and more about Cephalon, its advisers and what their strategy was when they announced the bid.

Cephalon took out a few of the big shareholders pre-bid (up to the allowed 20%). After this, Rockwell/Yaps still had about 5% and Sung Hun Kai had about 5% (based on substantial shareholder notices). So in theory it was always possible for a few shareholders to prevent Cephalon reaching 90%.

In addition, Cephalon would (or should) have been aware of Arana's huge retail shareholder base (11,000+ in the 2008 Annual report). Even the top 20 shareholders list in the 2008 annual report is deceiving as some of the larger shareholders are nominees companies that could potenitally represent a wide variety of individual interests.

My gut tells me that Cephalon (if they did their homework) have always known that a revised offer would be a possibility and that $1.40 was just testing the waters.

So here we are in May, in the middle of a global financial crisis with a bid offering a supposed "80% premium" to the pre-bid price, and the bid acceptances have slowed to a veritable trickle. It was laughable to see the last notice with Cephalon only just triggering the Corps Act requirement for a substantial shareholder increase by a fraction of a percentage point! Cephalon would be absolutely spewing at the crap state of acceptances.

I have not wavered from my very, very strong opinion (see previous posts) that Cephalon's end game is 100% ownership. DON'T FORGET that, IMO, Cephalon have now derisked ART621 which is where much of Arana's enterprise value sits. The publically available data suggests a product that is safe and has some efficiacy - in my view the biggest risk was always going to be finding a partner who wanted to try and crack the market (ie take on Wyeth, J&J etc). If they close at less than 90% then they run the risk of the Sri Lankan arthritis trial producing positive results and giving the share price another huge leg up (anyone aware of when these reults might be forthcoming? You would expect sometime this year given that it is only a small trial - 20 participants.)

All-in-all, I was thinking a revised offer of 1.60 but now I am thinking a lot higher. First, the broader market has moved up 30% since the offer. Second, the other retail shareholders I speak to want fair value (based on the valuation commissioned by small shareholders, well over $2), so I am inclined to think that Cephalon will try and close this out for $1.80-1.90. Any price increase will trigger acceptances from the traders ... it is the retail shareholders (me included!) that are the issue and, IMHO, whatever strategy they adopt to 'mop' up the retail shareholders will now have to include a solid price increase.