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Panderman,
https://grammarist.com/spelling/math-maths/
Hey Folks,
Yes I did ponder immediately after my post RE the £23M that BCN will receive for the 53M new shares, so agree my maths was a little bit off.
But the interesting thing on that is that IF (BIG IF) the deal were to go through then, from what I understand about M&A activity, that money would circle back to Ganfeng as part of the the cash held by the company, so in effect Ganfeng's offer of 67.5, which is low by all standards, ultimately hands them their £23M back !!! Brilliant planning by the Chinese, and a double whammy for shareholders.
Finally, the current low share price has got to be with the fact that the market simply does not see the deal going through with the current terms - I think that's great news !
If I hadnt seen the last line of your post I was going to go nuclear !
But yes the Ganfeng offer price makes no sense !
Coldjoe, MATHS!
Hi Tiger
Surely Hanwa will oppose this with their 3.21% - they want the product and if GF end up with total control I don't imagine they will supply Hanwa after the expiry of the existing 2 year agreement. So if M&G opposes this then between them there is already 17% against. You only need 25.001% to make the bid fail as I understand it. It suddenly looks doable - and maybe that explains the discount - the market doesn't think this will succeed at this price despite GF already holding 28.8%.
At the very least I have convinced myself that an increased offer is possible.
Hi Zephyr!
You're forgetting that Bacanora will receive a substantial sum in cash for the new shares they must issue to Ganfeng - cash which should be included in any proper valuation of the company. Yes, only 45p per share, not the current share price, so there is some "effective dilution", but much less than you're calculating. I still make it that the discount is "too big".
Anyway, let's see if any of the major shareholders have anything to say about the proposed deal before Monday opening.
otherwise I reckon that if we get a formal offer (not just a proposal) then the sp will move to say 64-65p
zephyr I don't think your math is correct, but either way the offer is 67.5p so if it goes through Bacanora shareholders will be paid 67.5p for their shares and Banacora will de-list (you probably won't pay any tranaction fee either)
@165zephyr
Have you accounted for the $31m to be recieved by Bacanora which should increase market cap by that amount?
"53,333,333 new Bacanora Shares at the placing price of 45p per share, representing gross proceeds of approximately US$31 million" (£22.18m)
Would that make it the following?:
£223.2M+£22.18m / 384M = 63.9p
As many here have already mentioned, I too initially thought that buying in at current levels of 57p would be a no-brainer as the offer price is 67.5p and therefore easy money can be made. However after having done some calcs I think the market is correctly pricing BCN.
Here are some calcs:
=================================
Current ownership of Ganfeng @ 17.41%
=================================
Total Shares = 330,811,568 (from RNS of 3 Feb 2021)
Ganfeng's 17.41% = 57,594,293 shares = £38.8M (at offer price of 67.5p)
Remaining 82.59% = 273,217,274 shares = £184.4M
Total BCN valuation = £223.2M
=================================
Future ownership of Ganfeng @ 28.88%
=================================
Total Shares = 384,144,901 (from RNS of 6 May 2021)
Ganfeng's 28.88% = 110,941,047 shares = £74.8M (at offer price of 67.5p)
Remaining 71.12% = 273,203,853 = £184.4M
Now, the valuation should be equal to £259M (384M x 67.5p), however treat this transaction as very much a dilution of shares as new shares will be issued, with no change to the underlying valuation of the company, therefore the share price adjusts downwards accordingly i.e.:
£223.2M / 384M = 58p
So in short the market is, IMHO, correctly pricing at 57p.
Oh and BTW, I too think the Ganfeng offer is a joke. Let's reject this !!!