Stephen Tindall says his $5.75-a-share bid for The Warehouse offers a fair premium but yesterday there were plenty of investors happy to fork out $6 a share for a slice of whatever action is about to unfold.
On first appearances that doesn't bode well for Tindall's chances of success. But it depends on who you talk to.
Nothing polarises views like a takeover and the truth is typically somewhere in the middle.
The only certainty is that no one is prepared to admit that yesterday's share price spike was unexpected.
Among the New Zealand financial institutions that own Warehouse shares there was a growing chorus yesterday calling the bid "skinny", "a bit light" or "not particularly exciting".
Those analysts and fund managers were talking up yesterday's close of $6.01 as proof that the market is expecting a higher bid.
The logic is compelling enough: Tindall's equity partner PEP is a hard-nosed veteran of the Australasian takeover scene. It is bound to have more in the tank. It would never expect its first bid to be its last.
But - say those close to the Tindall camp - that is exactly what you would expect the local market to say. The institutions are just doing their job by talking up the price.
In fact the $6.01 price is confirmation that the offer is on track to succeed. This view also comes with a sound internal logic: the market is pricing in the possibility of imputation credits which could deliver a special dividend of up to 30c a share.
On that basis, the $6.01 price is just about bang on expectation and would need to go a lot higher to rattle Tindall and PEP.
And what about the hedge funds? Whenever or wherever a sizeable takeover bid is made there are specialised funds and arbitrage players ready to swoop. Basically these are big investors prepared to play the odds that a higher offer will emerge.
More often than not they are right - a rival bidder emerges or the shareholder resistance forces an increase in the offer price. But because they spread their bets across the globe they can afford to get it wrong sometimes.
There were hedge funds buying in yesterday but probably not enough to cause great concern for the bidders. That doesn't mean we won't see more interest as the deal progresses. Expect the spin to intensify.
<i>Liam Dann:</i> Analysts see $6 as clue to success of bid
Opinion by Liam Dann
Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.
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