RE: !10 May 2024 22:16
Anyone expecting £40 is in my view dreaming, sorry. As I posted earlier this week the sp in early 2022 was an absolute bubble number, underpinned by extraordinary "dislocation" commodity prices following Russia's invasion of Ukraine. £35 was an outstanding exit point then given the long term sp history. It is now very clear that the sp at that point masked serious deficiencies in the company which have also got materially worse while commodity prices have retreated, culminating in the shocking 20% fall in the sp a single day last December when AAL.L made the appalling announcement it did then about reducing output and capex. Hence why it is now a sitting duck for a predatory takeover.
Further, note this from the FT yesterday - "BHP is unlikely to radically increase its offer in its formal bid, which is due by May 22 ... and it has limited room to go higher, according to a person familiar with the company’s thinking."
Ouch. So it now seems this is likely to be a slow-drip charade starting with another lowball number in a formal bid, then limited if any eventual upside from there
So in the end we arrive very possibly it now seems at limited upside from the roughly £25 implied by the BHP's first informal offer. Which would not have involved you getting anything like £25 a share from BHP in any event. BHP's proposal is not a takeover offer, it is an offer for certain AAL.L assets. For which they are offering a share swap which works out at around $14 per share for those assets (as I recall when you broke down the numbers). The £25 figure came from BHP putting it about that the residual bag of sh*t they would leave behind (mainly Kumba and Amplats) would supposedly make you up to around £25.
BS - there is no way to know what those residual assets would trade at if listed on their own, especially as they may well end up listed only in SA. In short, good luck with those ever trading at the prices that BHP has attributed to them, or with ever selling them even if they did.
Taking all this together my view is that if £30 hits the table from BHP sell on market immediately and run. Brace yourself for even less.