I once held a Nickel miner Jubilee Mines, JBM, received takeover offer from Xtrata for $23. Stock rocketed to $24.30, despite JBM management basically pleading with the market that there woudl be no counter offer, and that all potential bidders had been invited and had attended closed door investigation and bidding process.
A bit of time went by. There was no counter offer. the SP drifted back down to $23.00 and was bought out at this price. Tens of millions of dollars were traded above $23. These buyers lost money if they did not successfully trade it above $23.
I should really have sold when it was above $23, but I too was excited that there may have been a counter offer. I coudn't complain though, as I bought for $4 and made the largest amount of money I have ever made by far in my whole life.
Would have made more if I had bought JBM for 6c in 1998...
In any case, in this case for FMS, we have been told other suitors have been approached and the MMK offer was the best, but that still leaves us open to a better bid IMO, as iron ore is a bigger market than Nickel.
29.5 buys is looking for a 0.5c profit, or 1.7%. Annualised over a month and half is 13.6% return, so still a 'reasonable' arbitrage trade but not that attractive, considering risk IMO.
Personally I reckon chances of a counter bid are about 1 in 3 (wild guess)
FMS Price at posting:
28.8¢ Sentiment: None Disclosure: Held
