"spawny: The expectation with a tender offer is rather like the situation with a takeover. A price is established, current share price + value, then the market will react and either shareholders sell to buyers at a discount of a few percent right away, or accept the deal, or hold on the expectation that the tender deal will be priced in anyway. Institutions prefer to take profits at the time of their choosing, so rather than a single dollop of money, investors have several options to choose from. Long term holders simply hang on rather than having to use the divi to buy more shares, dealers can move in to buy at a price somewhere between the current price and the offer price, or people can accept the tender price from the company. This room for manoevre is more effective than a large divi which leaves investors with a potential tax bill. "
This is a good summary of the situation.
"FOR IMMEDIATE RELEASE 6 January 2022
CAPRICORN ENERGY PLC ("Capricorn" or "the Company")
India Update
Capricorn Energy PLC1 announces that it, together with its subsidiary CUHL2 (the 'Company'), has entered into the final stage in its undertakings with the Government of India by withdrawing all global enforcement proceedings. This concludes all the necessary steps required of the Company under the rules of the India Taxation (Amendment Act) 2021.
Upon its acceptance of the Company's submission that all of those requirements have been satisfied, the Government of India will pay the Company a tax refund of approximately INR 79bn (US$1.06bn).3
Capricorn is working collaboratively with the Government of India towards expediting the refund within the process of the Tax Amendment Act Rules. The previously announced special dividend is expected to be paid in early 2022."
At least now the silence of the lamb is broken!!
Cairn Energy “has entered into the final stage in its undertakings with the Government of India by withdrawing Indian and global appellate and enforcement proceedings,” the company said in a notice published in a newspaper on Wednesday. “This action is the final necessary step by the company under the rules of India’s Taxation (Amendment Act) 2021.”
The company will now file its ‘Form 3’ with the income tax department. This would then result in the scrapping of the previous tax demand a ..
Read more at:
https://economictimes.indiatimes.com//news/economy/policy/cairn-energy-withdraws-all-litigations-in-retrospective-tax-case/articleshow/88705064.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Step by step through the calculation
As Capricorn Energy operates in the oil and gas sector, we need to calculate the intrinsic value slightly differently. Instead of using free cash flows, which are hard to estimate and often not reported by analysts in this industry, dividends per share (DPS) payments are used. This often underestimates the value of a stock, but it can still be good as a comparison to competitors. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. The dividend is expected to grow at an annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.9%. We then discount this figure to today's value at a cost of equity of 9.4%. Relative to the current share price of UK£1.9, the company appears quite undervalued at a 49% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Value Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)
= US$0.4 / (9.4% – 0.9%)
= UK£3.7