When will SKE open?, page-8

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24/06/15

17:53

Post #: 15523663
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Originally posted by madamswer ↑

Yeah, unfortunately the way these two companies have presented this deal is a bit naughty, and is likely to lead to the sorts of errors you've made, sorry to tell you.

Firstly, you need to deduct whatever dividend you are expecting SKE to declare in relation to the second half, from the 25cps cash component.

So if you assume a 6cps final dividend, then the cash component is reduced to 19c (if you don't do this, you are double-counting).

Also, and this is one that I think most people have missed - PRG is trading cum- an 11.5cps dividend, for which the ex- date is 01/07/2015, which is before the transaction between SKE and PRG is expected to close. Which means PRG's share will - all things being equal - fall by 11.5cps on that day, so you need to adjust the current PRG share price by 11.5c before you apply your scrip ratio of 0.55.

[This last point explains why the SKE share price appears to have closed so much below what could be - erroneously - to be the fair value price. Do the maths on the PRG closing price, but adjusted for the 11.5cps dividend, and you will get very close to the SKE closing price:
i.e., (2.82 less 0.115) x 0.55 plus 0.25 = 1.73, compared to the SKE closing price of 1.655, so just a 4% variance (which probably reflects an element of risk that deal doesn't go through for whatever reason)].

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Many thanks for your quick response which I will digest a little later. Particularly the impact of PRG going ex next week, and whether this does in fact alter the end equation

SKE Price at posting: $1.66 Sentiment: Hold Disclosure: Held
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When will SKE open?, page-8

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