1. CFC has been playing games with DML right from the start IMO. Their initial offer was so full of holes that no board could really take them seriously. If you look at some of the key announcemnts you will quickly see why.
2. In doing so CFC had management distracted for a long time - rather than spending time on the company they were wasting time and money on this, dare I say it, next to useless bid. (One lesson I have learnt is that if there is another bid by any Chinese coy for any of our cos I would sell on market very quickly.)
3. CFC maintain their holding at a significant level.
4. So management decides on a CR. What does CFC do - it says I am not participating but taking my bat and ball and going home. Is this designed to send a message to all key stakeholders?
5. CFC then comes up with "an offer for the coy".
6. IMO DML has significant resources that should be attractive to others apart from CFC. The debt DML carries is underpinned by assets - it is not as if they have frittered the borrowings away.
So my view is call their bluff! If they are serious they will come up with an attractive offer. If not someone else may come out of the woodwork. The last thing the coy should do is try and appease this nasty suitor! That would be a big mistake IMO.
DML Price at posting:
34.0¢ Sentiment: None Disclosure: Held
