LZA: My best guess would be to hold on. Whilst Cape haven't...

LZA: My best guess would be to hold on. Whilst Cape haven't announced anything formal yet, my guess is that they probably will in the not-too-distant future. They're currently in an acquisition phase, so it's not as though their interest in PCG has come out of the blue and isn't genuine. PCG would be a great acquisition for Cape and I'm sure they'll pursue it further than just an informal discussion - they've got plenty of cash to do the deal and them buying PCG would be a coup for Cape. Also, the content of PCG's announcement makes it pretty clear that PCG management are open to the possibility of doing a deal provided the price is right: "the approach does warrant further discussion to determine if the potential
offeror is prepared to pay a price that the PCH board would recommend to shareholders." If PCG management came out and made it clear they weren't going to entertain any offers, then selling out would probably be a good call, but my personal feeling is that they will sell out at what they feel is a full price, somewhere slightly north of $1.00.

Also, if you sell out now and no formal takeover offer is made, I personally don't think the price will fall back as far as you might hope. It may fall back into the mid-70's, but I doubt it'd go all the way back into the low 60's. Once a predator has shown interest in a target, even if the target rejects the offer, the target's share price will remain above pre-bid levels because shareholders become more aware of that company's strategic value and the target's share price has a takeover premium built in. An example of this happening would be Coles or Patrick - even though both companies were the subject of failed bids, their share price didn't slide all the way back to where it was before the takeover offer was made.

Cheers.