RE: Why did Schroders sell?1 Feb 2023 14:13
Following is an attempt to make sense of this conundrum.
Andy Brough may have decided to sell because (1) he sees better investment opportunities elsewhere and because (2) he believes, from what he knows of the Alliances and Ashley, that neither party is going to be willing or able to mount a successful bid, for a variety of financial, arithmetical and psychological reasons. Had he not sold, which is what has triggered the bid speculation, the share price would most likely still be at 28p-30p, the level at which he was willing to offload his shares in the first place. By selling when he did, a short-term surge in the share price has been created, which will be sustained only if there is a successful bid, an outcome he has concluded (rightly or wrongly) is not going to be achieved.
Brough could have continued to hold the shares, on the grounds that BWNG is substantially undervalued. But people – including Brough himself - have been saying this for years yet BWNG retains its lowly rating. He may have decided that enough is enough.
It seems plausible that, as evidence emerged that the Alliances (Lady Homa) were buying, Ashley stepped in because he feared (rightly or wrongly) that a move to take the company private was afoot and he wanted to preempt this. My guess is that such a move was not afoot and the purchases were in fact defensive. Ironically, rather than discourage Ashley, they forced his hand.
As Beechhurst has helpfully demonstrated, Schroders are not the only ones who have decided that enough is enough and there is another big seller in the market. Most likely this is one or more of the other funds, but there is perhaps an outside chance that one of the Alliance family members is also looking to scale down their holding. (Before Schroders RNS, I toyed with the idea that David Alliance was the mystery seller, but we now know that this was not the case. Had he been the seller of part of his stake, the chances of an agreed sale with Ashley would have looked promising. Since there appears to be no inclination to move in that direction, a protracted stand-off looks more likely.)
As a holder myself, I would be pleased if there is an agreed sale, at a level significantly higher than today’s market price, which would unlock value for all shareholders. As has been commented elsewhere, if Ashley does bid, a cash plus equity offer looks considerably more probable than an all-cash offer. That would of course still push the price up and give shareholders the opportunity to exit profitably (hopefully).
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