This speculation has been around for ages. The bottom line is...

This speculation has been around for ages. The bottom line is that i don't think TOX will still be around in 5 years - at some stage, TPI will almost certainly buy it out. I think it's literally inevitable, and so is really a matter of "when" rather than "if".

At the moment however, TPI's ability to do a takeover is very limited. As Terrier said, TPI's scrip has been trashed over the last 12 months because they loaded up on debt for previous acquisitions and, given the downturn in the last 12 months, have overpaid for some of their assets in hindsight. I would definitely not want TPI scrip in return for TOX at the moment, but TPI have stated they can't use debt/cash to do acquisitions any more because their balance sheet is already heavily leveraged. So they're in between a rock and a hard place - no takeover target is going to want TPI scrip at the moment, and they can't afford to pay cash.

Another factor making it more difficult for TPI to do a takeover of TOX at the moment is that the discrepancy in the trading multiples of the 2 firms has disappeared. TPI used to trade at a substantial premium to TOX, but now TOX is actually trading at a premium to TPI. Therefore, if TPI were to issue scrip for a takeover, it would be value destructive (at least in the short term).

The fact another insto announced itself as a significant holder on Friday is important in the event of a takeover offer. Instos being on the register ensure that a successful takeover can only be done by paying a full price. TOX now has 3 insto holders (Pengana, Manifest and Fisher).