Analysis17 Mar 2024 11:40
My last entry here was in about Oct 22 at the 230 level, since then I have added and now hold quite a few at an average in the 250's . I have read through the recent posts but it seems that no-one has summarised the position thoroughly, so here goes:
There are 4 possible scenarios;
A The takeover occurs on the present terms
B The takeover occurs on slightly different terms(a higher offer/some cash)
C A competing bid arrives
D The deal collapses
So as a holder what to do(my thoughts everyone else makes their own decision).
For A/B IF you wait and hold until the deal completes you end up holding shares in Mondi equivalent to the number of shares you hold X 370p.However IMV, on completion Mondi shares may well fall because of analysts' fears of
" integration risk/delay, Mondi overpaid, dilution ......."The fact that the offer is "all share" is generally not viewed kindly by the city.
For C, you wait until the dust clears and ( maybe ) a higher offer succeeds from Mondi or an alternative bidder, or Mondo or the other bidder includes a significant cash element, better outcome/
For D SMDS shares will undoubtedly fall sharply , even though they have done nothing wrong and are , in effect , the same company as today. On 8 Feb when the news broke SMDS were trading in the 280's , that's about where they would revert to IMO .
So what to do?
As I said above, I hold at an average which will bring me (incl divis) about a 40 % profit in 18 months. outcome A/B might add another 10% to that, D would take me back to 10/15%, and C if it occurs may be a significant improvement.ALL things considered, will sell tomorrow and reinvest the money elsewhere.
Feel free to argue/amend or rubbish my view, it is my personal opinion , no more, and if flawed, help me to correct my analysis, whatever the outcome I wish you good luck, IMV SMDS would be better as a stand-alone, but the company seems pretty set on accepting the opportunist offer.