Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Looks to me like this is a case of attacking the NFC SP under the guise of market weakness to lower the bid value, in order to get a higher offer at which point both SP's correct. Someone should have a good look into what's happening here. It seems v circumspect. Especially with all the competing interests. I wonder at what point this becomes manipulation.
The two deals are not far off parity now. It's not much of a reach to consider who might be driving this who benefits, and why. It's clearly not just normal market trading.
1. Release weak hands ahead of eventual deal. (Who then sits on a pile of discounted shares below deal value.
2. Achieve a lower bid value for the NFC deal.
3. Coerce a higher offer or withdrawal to achieve a greater profit or improve the odds for the initial offer.
Sanchez- regardless, this has made things very interesting and very murky.
NFC’s offer is now effectively 224p. This was my issue from the very beginning with their offer… it was so intrinsically linked to their share price. S4 Capital on all their acquisitions make it a 50% stock and 50% cash offer. NFC’s 80% stock was always alarm bells for me. So, here we are with NFC and ADVT offering almost the same as each other. But, ADVT and SAA have burnt their bridges and despise each other, so I don’t think ADVT get the deal done. But equally, why would ADVT accept NFC’s offer that is no better than what they have offered?!
Intriguing and will be interesting to see how this plays out. One solution is for NFC to make it a better cash offer, rather than stock.
I agree. It's been too easy to get the offer price down in what is clearly an aggressive effort to do so. Perhaps why ADVT didn't reduce their offer.
Increase sorry!
It is a bit naive to be valuing the deal based on the minute to minute gyrations of NFC's share price. The important thing will be an assessment of the value of the combined entity post acquisition, albeit with an enlarged number of shares. The rational for the proposed take over is that the sum will be greater than the parts. I cannot sell NFC shares today as a result of the take over, so the immediate share price is largely irrelevant, unless you are a novice investor.
The naivety is not seeing what is playing out in front of you and the tactics being used because it doesn't fit what you wish the situation to be. That's novice.
What IS being played out in front of us Sanchez? Please share your superior insight.
Urraca >I cannot sell NFC shares today as a result of the take over
Trades are taking place today on NFC. What is preventing you from a disposal if you so chose to?
Sanchez, please elaborate on the tactics you feel are being deployed. Take us behind the curtains of your mind for a look back stage at the outfits awaiting their spotlight moment. Thx.
SeemsLuke, I meant I cannot sell shares acquired as part of the takeover, or which reflected the value of the merged entity.
Haha, Well no, that would be a trade destined to not make it to the clearing house!
Sanchez whats your take on the pull back of both SAA and NFC SP's and how do you or anyone else for that matter thinks this is going to play out and conclude? I've not got shares in either - it caught my eye on the news but I was cautious to see where both SP's went and was fortunate to have not made a decision but is there still value to be had coming in fresh? Thoughts most welcome... :)
Just thought I would send a quick reply. I was lucky enough to sell out at an average of 218. I did this because I do not wish to hold shares in NFC. Management there are aligned with their own interests, and they do not always coincide with those of smaller shareholders. The new entity will, I believe, be a success, but that success will benefit NFC management much more than anyone else. If I still held, I would continue to do so, and sell on any rise once the merger is complete. This was my second largest holding, and I have moved the cash into dividend payers. Good luck to all still involved here.
This deal isn't happening, at least in its current format.
I said to a fellow investor when the NFC offer was announced that it was far too heavily weighted with stock (only 16% cash!), meaning any negative move in NFC's share price impacting severely what is ultimately paid for SAA.
S4 Capital do a 50/50 stock/cash split for their acquisitions. This would have been better.
With NFC's SP now falling by the day, I don't see how they can up the offer continuing with stock. It will have to be a much higher cash element. Already, they would have to double the cash payment from 40p to 80p just to get back to the original 247.5p.
Lots of potential outcomes here, some of which could be:
1. NFC up their offer, based more on cash.
2. They maintain their offer, which is now effectively the same as ADVT's (perhaps less, if looking at NAVs).
3. They withdraw their offer completely.
4. Another bidder comes in, able to snap SAA up for 230-250p but for an all cash offer).
5. It all completely collapses and the SP goes back to 140p.
There's plenty more possible outcomes, of course. Would be very interested to hear other people's thoughts and possible scenarios?
I agree that al your scenarios are possible, but by far the most likely is that the deal goes through as is. Both sets of management want this, and that is what matters.
andsoforth - I can’t believe that Vin Murria/ADVT will accept it. At one point today with the NFC SP down at 1020p, it was worth less than their own bid!
For those new to this stock, I meant to say that Vin Murria/ADVT own 22.3% of SAA, which NFC will need. So they have to be on board with all of this. I don’t see that happening with NFC’s SP where it is.
Doc you are not quite right. Vin's 22.3% is not in itself enough to absolutely block a bid. Given that she bought in at around 40p per share, she'd be looking at acquiring a massive chunk of the new entity essentially for free. I think she's trying to squeeze a bit more out - and why not. But I think she's too smart to kill this off. You have been relentlessly negative about this since the start. Why is that?
Urraca - are you trying to suggest I am deramping SAA?! I have told you I doubled up at 215p. Strange way of being negative.
Anyway, NFC need 90% of shareholders to agree to this to make it compulsory. Sure, they can get the other 77.7% and ADVT couldn't necessarily block anything (75%) but ADVT could probably quite easily get that addition 2.7% right now. In addition, do NFC really want such a large shareholder who is against them from the start?
I don't know where you got 40p from as her in price? She/ADVT loaded up their big chunk of shares at £2 in January. The NFC SP currently means the bid is 217p. She is not getting a massive chunk of NFC "essentially for free"?! She has paid a lot of money for her SAA shares.
You clearly can't have a reasoned debate. I think something will happen that will ultimately be positive. But it won't be the current terms that have been offered and there is plenty left to go on this just yet. All my opinion.
Just to add, the market clearly agrees with me otherwise the SP would be more than 193p.
Dear Doc, may I refer you to the RNS of 5 May 2020 advising that Vin Murria had acquired 13.5% of SAA. A quick look at the share price chart will show it absolutely cratered late March 2020, hitting around 35p, before recovering somewhat to 44p by 1 May.
The market is simply tracking the NFC price.
And I'm not 'suggesting' you are deramping. I'm simply observing the fact that you are. And wondering why.
Urraca - fair point on Vin's personal holding. But ADVT's £2 stake will mean they need more than the current 217p?
I don't think I am coming across as negative. Just reasoned. Maybe I'm trying to temper my expectations to avoid any potential disappointment. But I can assure you I am long on SAA and very much hoping this comes off.
Hello chaps. As I say, no longer holding here, but still a keen watcher. Surely NFC do not need the ADVT stake, as they can work a takeover around it. ADVT are now showing a good profit on their holding, and could take the resulting capital elsewhere and start again. I really would just accept that this is going through. Both businesses are largely run for the benefit of the management, just check all those options over the years. This will be the best result for them, so it will happen. If you like |NFC, hold here or even buy more. If not, it may be time to go.
andsoforth - I can’t recall a takeover where the main shareholder (in this case Vin and ADVT with 22.3%!) weren’t on board and agreeable to it! And why would they right now… NFC’s bid is effectively no better than their own?!
22.3% is irrelevant if NFC can get the remaining 77.7%. ADVT will be happy to take the profit on their holding; management stay in their jobs; everyone is happy! If this hits the 160s I will buy back, but otherwise I do not see value here. (But I am usually wrong!)