probability of takeover increasing, page-6

and there's more...LOL.

This TO is very different from the usual approach. Mostly (99%) a rival firms asseses its target in secrecy and then BANG... TO announced without warning! Price usually 20-35% above previous week or month's average. A bit of argy-bargy ensues, scalpers enter the fray... a higher price often eventuates and deal goes through. Where a TO is sucessfully resisted history shows that in 90+% of cases the company would have been FAR BETTER off to have accepted. examples are numerous with QAN and SUN coming to mind.... with their current SP being a fraction of that offered about 18 months ago. And YES... our own NUF was offered about $17+/share in a TO attempt not too long ago. What a mistake by greedy Mr Rathbone that was!!

This TO is completely different. The aquirer has announced it wants to examine the NUF books, meet with NUF management and thoroughly examine/analyse/investigate NUF BEFORE offering a TO price. China has bought some turkey's recently (eg. 19% of RIO) and is rightly nervous of another cock-up. So we are now 2 weeks into the process and it may be another 1-2 weeks before a decision is made. I have noted previously that the longer the due-diligence lasts... the higher the likelyhood of an offer being made.

But what about the PRICE?? Everyone wants a premium. Sure... the current SP is 27% above the SP when news of TO was made public BUT for someone who paid $11.63 at mkt close today... the premium is zilch!! chinese outfit is well aware of this but clearly their strategy is: 'Let's get this aquasition right'. If it means 4 weeks of investigation while SP rises... 'well we would rather pay more and get a company we really really want... than have yet another embarrassment'.

This approach means China will pay more. No doubt about it. But how much more is the question? it's hard to be sure but indications are that July sales for NUF were outstanding. this has def helped the bottom line esp as NUF has unusual year-end of 31/07. I have no doubt China does not intend to also pay holders a dividend. So they must decide before NUF FY09 result is announced.

What to do? Well after considering the above i have lifted my expected TO price to 13-13.50 range. Can't see it being less.