Pomodoro - the underlying rationale for SLR organising the takeover seems to be that the new company, which will be the two entities combined, will find itself included in more indices than either SLR or RED are at the moment, and that this factor alone will create demand for the shares from the passive fund managers.
No doubt there are some active managers who are now buying and hoping the takeover occurs so that they can sell to the passive managers in due course. This selling would to some extent offset the buying by the passive funds (who won't actually be buying until the new company is actually included in any indices for the first time).
Despite the chatter on HotCopper that lots of SLR shareholders will vote against the takeover, it's hard to believe that the SLR Board and management didn't line up all the ducks before initiating their tilt at RED, so the risk of the deal not proceeding doesn't seem high (but anything can happen).
Notwithstanding the corporate activity involving these two companies, such a "blip" in the shareprice from a successful takeover would be a once-only.
The reason to invest in this company (as opposed to having a short term trade on the takeover outcome) should depend on your view of the gold price in the future and whether or not you think the new company is "best in class" when considered against its ASX listed peers.
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