Last day9 Feb 2024 10:16
Last day of Arix trading, and the SP mismatch still persists. I've tried hard to come up with ideas why this might be so, and here's a few theories:
1. The market cap is too small for institutional investors to get involved. They often impose a minimum limit on themselves. (As an aside, the merged company will have a mcap above $500k, which might bring it onto the radar for some IIs. Hopefully the liquidity might improve too.)
2. Cautious retail investors (e.g. the sort that invest in funds rather than individual companies) think there's no such thing as a free lunch, if it looks too good to be true...
3. Less cautious retail investors aren't interested in making a few percent profit, however nailed on it looks. They're far to busy trying to multibag with HE1 and the likes.
4. Fear of a post-merger sell-off by ex-Arix holders. If this happens, it might be better to hold back cash to take advantage.
5. $/£ exchange rate risk, or just not wanting to hold $-denominated shares.
6. Some retail platforms may not support RTW shares. HL does. Fidelity will give partial support - it will let people hold the acquired RTW shares and sell them in due course, but not buy new ones. Those are the only two I know about.
7. Worry that the second vote won't achieve the required 75%. This seems unlikely given the 92.22% in the first vote. (It's amusing that in theory RTW could get cold feet and use their 25.5% to scupper the deal themselves! But they've RNS'd undertakings to vote in favour.)
I'm not really convinced by any of these, can someone else do better?! GLA