My view is that it is unlikely that BG have a plan that involves a single bid and then BG goes home after AOE raises the effective price to around $7.
If AOE wins there is a risk that some PES shareholders will sell their new AOE shares after the AOE bid finishes and the AOE price will fall.
However, if the AOE price rose to $3 that is a paper gain of 40 cents or a gain of 1.57 x 40 = $0.62 pushing the AOE bid to $7.60 - $7.80. Thus if BG bid $8+ you may be better off taking $8+ than using the big assumption that the AOE price will stay above $3.
Dealing with the AOE pricing that is on the table at $2.60 the AOE bid is $3 cash and $4 shares. If the new AOE shares qualify for rollover relief [AOE gets at least 80% of PES shares] at a company tax rate of 30% that is $1.20 in deferred capital gains tax.
As a matter of interest the current AOE bid of around $7 values PES at the same price around $850 million that QGC offered for SHG in the intial bid before the BG takover pushed up the value of QGC shares.
As PES is a better prize than SHG there is still value left.
On the Shell shareholding figure the original 14.88% has been diluted by the option conversion to your figure of around 11%.
AOE Price at posting:
$2.65 Sentiment: Hold Disclosure: Held
