takever price, page-8

Have been watching ACL threads for a couple of weeks .... currently the only stock I own.

My limited experience with Australian biotech takeovers (the Arana takeover springs to mind) suggests that the takeover price, and the board recommendation as to that price, is in part determined by:

(i) what is fair value (to which we will all apply the multitude of valuation methods and criteria); and

(ii) what is the investment strategy of the top few shareholders?

With reference to (ii), this is crucial as direct negotiations with major shareholders can result in a bidder (say DRR) starting with 40% of the shares and some serious momentum which a small retail holder can find very hard to resist.

None of the major shareholders will want to sell for a song but if you are an Orbis holding stock like ACL, you only have limited opportunity to 'exit' and realise your investment (on-market volumes just wouldn't support the price if an Orbis exited other than through a takeover).

In short, in determining my personal strategy about price re-rating events (such as a takeover) I ask myself "What might Orbis/citigroup/etc think is a fair value in the context of its investment criteria and exit/realisation strategy?"

I don't know enough about our major shareholders to form a view ... any thoughts?