I agree with your comments regarding surprise at the 'directors not having a clear enough view of the read ahead to the merger'.
My surprise is especially with FER directors, who should have had access to sufficient information during the due diligence phase (prior to the merger announcement) to detect potential cash-flow issues with PLT if they are as the independent expert claims. Why would it take an independent expert, reviewing information from that period of time, to pick something like that up?
Meanwhile, the main thing that has changed from a PLT perspective regarding FER is them loosing the court case, which couldn't have been anticipated (other than being a possibility).
I also find it quite weird that the independent expert was only working on cash balances and other related information as at the end of March 09, almost 3 months prior to the release of their report. Why would they have not requested and been granted more up to date information from PLT, if it was the main basis for considering the merger unfair and unreasonable?
... (pure speculation here) ... unless they asked and they were not forthcoming. This could be for at least two reasons: 1. PLT went cold on the deal or 2. the figures were not flattering. I suspect #1 might be the case due to the court case result, but obviously cannot rule out #2 as well.
We obviously need further guidance from PLT as to where they are actually at, ASAP. Does anybody know or expect whether there will be a subsequent response from PLT regarding this matter? For instance, whilst I'm jet-lagged and can't remember all the details, I think they've now got the right to withdraw the offer, now that the FER board no longer recommends its acceptance (please correct me on this if I'm wrong). If so, you'd imagine it would be very soon and with some word of explanation regarding capital position (or not?).
Anyhow, sorry about the tired ramblings. Probably best to end by providing a link to an article from the Australian dated 30th June, as follows:-
CITY BEAT: Rebecca Urban | June 30, 2009 Article from: The Australian
THE course of true love never did run smooth. Ten weeks ago, Fermiscan Holdings was all for a plan to merge with fellow medical diagnostic group Polartechnics.
So enamoured were the two, they issued joint press releases featuring the corporate logos of both companies. Together, they would become "Australia's largest women's health diagnostic business", with tests being developed for the screening of breast cancer, cervical cancer and sexually transmitted infections.
Yet when Fermiscan delivered its official target's statement to shareholders yesterday, it came plastered with the instructions "DO NOT ACCEPT". Strange, given not much has fundamentally changed since April -- except for the emergence of an independent expert's report by Lonergan Edwards & Associates.
Commissioned by Fermiscan to take a look, Lonergan Edwards didn't appear to think much of the deal for a whole swag of reasons, including the likelihood that a cash-strapped Polartechnics would need to raise additional capital -- and soon.
"Fermiscan shareholders should also be aware that both companies are high-risk investments and that merging the two companies will not eliminate those very high risks. At this stage it remains highly uncertain whether the company will achieve commercial success," its report warned.
Hence Fermiscan's change of heart.
"Although your directors initially intended to recommend the offer, as a result of the ongoing due diligence on Polartechnics and the conclusion of the independent expert that the offer is NEITHER FAIR NOR REASONABLE your directors unanimously recommend that you DO NOT ACCEPT the offer," the company said.
Shame about the "significant expenses" that it has incurred along the way.
A quick look at Fermiscan's share price, which has halved since the merger was announced, would have given the board a good idea as to what shareholders thought of the deal -- neither fair nor reasonable.
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Cheers.
p.s. I've obviously got to stop making mistakes and then doing subsequent posts to correct them (HC sooooo needs an edit facility). I've read a number of references to 'doing a TTH' recently! I just like to try to get it right, and unfortunately when the 'Post Message' button is pressed it's too late, it's out there (lol)
p.p.s. whilst it would appear I'm the eternal optimist (Red's proposed book title comes to mind lol), my sentiment remains LT Buy. DYOR and make your own investment decisions, but I've still got a hunch that PLT will get through this and move on to bigger and better things. Time will tell, and obviously they need to get their act together quick-smart (in the next half year, starting sooner rather than later), but pending subsequent guidance from PLT the non-merger might end up being a blessing in disguise i.e. assuming they sort out cash-flow issues, and manage to sell even half as well as they originally hoped, we'd be happy there was not a 1/3 dillution from FER shareholders taking part in that success
PLT Price at posting:
6.8¢ Sentiment: LT Buy Disclosure: Held
(20min delay)