sdl's takeover defence

Hi All,

While Hanlong's T/O bid of 50c is causing concern for many shareholders, I have put together a list of things that SDL has in their favour to either defend off, or at least ensure a fair value is accepted.

1. GJ would have been stepping up his defense, ever since Hanlong bought in. This is one of the main reasons why he raised $60m from international institutions, to dilute Hanlongs percentage and to have some cash reserves to see out any negotiations.

2. GJ would have a strong relationship with the Cameroon Government, and although China might have the cash, you would have to think that what SDL and Cameroon went through with the plane crash would count for something.

3. China might be in sweet with President Biya, but the project is a bit more complicated than just keeping president Biya happy. GJ would have established trust and relationships with not only President Biya, but a number of different levels of the Cameroon Government, not to mention Congo.

4. Through all of their staff and work carried out over the past number of years, SDL would hold a lot of intellectual property and information in relation to the project, so this gives them some bargaining power. Without all of this, the project is going to be even further delayed as Hanlong would have to start from the very beginning.


While shareholders face a nervous wait, I would imagine that SDL staff are also extremely nervous, and one would think that GJ would also have to take their needs into consideration when negotiating. What happens if Hanlong offers to retain a certain number of SDL staff? All of a sudden, GJ has to balance up his loyalty to his staff vs the his loyalty to his share holders.

The fact that the share price has broken through 50c on good volume, is also a good indication that SDL has some bargaining power. While some are suggesting that it is pointing to an offer of 55c, I will remind them that the SP only rose to 40.5c before an offer of 50c was made.