16-02-2021, 01:30 PM
Thank you fellow buddies for the insightful analysis as usual. My thought process is a lot simplier;
1) If the GO is successful, ie, Penguin is delisted (which is unlikely), minority SH will get $0.65c, which is the maximum they will get (unless the offer is revised). SH who sells in the market now can get this amount straight away, though there is a transaction cost.
2) If the GO is unsuccessful, ie, Penguin remains listed (which is quite likely), SH need to ask if the share price will drop below $0.65c. IMO, I think it will. In that case, based on probability, it is better to sell the shares or accept the offer
3) If (2) happens, then Penguin may declare a dividend (which is possible). However, after XD, the share price will correct accordingly, leaving SH no better off than before. And in fact, most counters correct more than the declare dividend after XD. So it is also possible that the share price will falls after a failed privatisation exercise, and falls further after XD.
So overall, SH should ask if it is better to accept the $0.65c now, vs the possible scenarios. Or sells now and buy back after (2), or after (2) & (3) above.
But of course, for a long term confident holder, then just forget about all the above scenarios and continue to hold this counter until it hit your estimated fair value.
1) If the GO is successful, ie, Penguin is delisted (which is unlikely), minority SH will get $0.65c, which is the maximum they will get (unless the offer is revised). SH who sells in the market now can get this amount straight away, though there is a transaction cost.
2) If the GO is unsuccessful, ie, Penguin remains listed (which is quite likely), SH need to ask if the share price will drop below $0.65c. IMO, I think it will. In that case, based on probability, it is better to sell the shares or accept the offer
3) If (2) happens, then Penguin may declare a dividend (which is possible). However, after XD, the share price will correct accordingly, leaving SH no better off than before. And in fact, most counters correct more than the declare dividend after XD. So it is also possible that the share price will falls after a failed privatisation exercise, and falls further after XD.
So overall, SH should ask if it is better to accept the $0.65c now, vs the possible scenarios. Or sells now and buy back after (2), or after (2) & (3) above.
But of course, for a long term confident holder, then just forget about all the above scenarios and continue to hold this counter until it hit your estimated fair value.