important info for shareholders, page-18

First post to HotCopper ... joined solely because of AAH although I have a few other biotech holdings which make for intersting reading too!

My view - Cephalon's endgame is 100% ownership ... absolutely no question - there is no other outcome that, in the medium term, will be acceptable to Cephalon. It is also EXTREMELY unlikely that they will exit Arana entirely (ie pull offer and sell their 20%) - it will cost them time, money and reputation (hello Sirtex).

Accepting that it is 100% ownership they are after, the only question for Cephalon is to find the balance between acquisition cost vs timing vs incidental costs (ie what will it cost in $$ and management time to either keep extending the bid or, more unlikely, keep AAH open on the ASX with them as majority owner).

The total volume of shares traded since the takeover kicked off is under 40M (ie less than 20% of the company). This volume is unlikely to change significantly if the offer remains unaltered as the sellers seem to be drying up. Assuming that:

- ALL shares bought on market have been acquired by traders (hedge funds, etc); and
- ALL traders will sell into the takeover,

that would only give Cephalon just over 50% (based on their current holdings).

On my estimates, from personal discussions at AGM's and public domain info, there is a handful of large (comparatively) shareholders that hold another 10-20% (based on pre-takeover numbers). Assuming none have sold yet and ALL will sell into the takeover, this gives Cephalon 60-70%. I think this is a current best case scenario for Cephalon.

If you are Team Cephalon you are asking yourself what is going to get us the 20-30% we require to get to compulsory acquisition (90%)?

I think 'time' alone is extremely unlikely to be enough. Arana's retail shareholder base is huge (200M+ shares on issue, 10,000+ shareholders)... it is small investors that will decide the fate of this takeover and mainly those from the Peptech side of the PTD-EGX merger, most of whom paid a lot more than $1.40. Everyone knows that the market is not rational and, if Cephalon has done their homework, they should know that the old PTD shareholder base will not be 'rational' and 'blink' first. If they haven't prior to an extension they are not going to sell without an improved offer.

Long and the short of it ... Cephalon would be confident of getting 50% (eventually) but they must know by now that they need to find the price point at which they will convince 20-30% worth of retail shareholders that they are not getting dudded and that Cephalon is paying a fair price.