CEY statement clarification18 Dec 2019 11:06
IN all paper mergers, as a rule, you are offering a "partnership of equals" to merge management, shares and capitalisation. Thus it is a good idea to act with and project an image of goodwill, integrity and empathy to your target throughout the process. I would argue that since 3/12 EDV have ignored all rules of chivalry and common sense. Relying on the market to force the CEY Board to do your bidding requires a lot of variables to work in your favour. But EDV chose a hostile approach from the start and their financials appear to be their Achilles heel.
1) Going public 3/12 behind the back of the CEY Board. That was an ambush and a hostile act. Yet EDV's proposal clearly show they need the CEY Board to persuade all CEY shareholders that a merger is in their best interests. It was an odd start and it has just got odder since.
2) since 3/12 market makers, brokers and banks have been active in both CEY and EDV shares. Did EDV calculate that this new cohort would be enough to pressure CEY Board to roll over at the terms offered? Two weeks in and CEY is trading 5p above the pre offer price while EDV is -$1.93 -7.48%. At this stage the respective share prices are not a ringing endorsement for the merger.
3) If you sign (10/12) a Non Disclosure Agreement (NDA) that should trigger openness and honest dialogue. But since agreeing reciprocal due diligence face to face with J E-R in Perth 14/12 EDV appear to have reneged on the agreed protocol in less than a week. Why ? what are they trying to hide ? If you don't offer trust and integrity at this pre-offer stage why should CEY Board agree to your unfair to CEY shareholder terms ?
4) narcissists like to control the narrative. They like to give you their options and pretend that you have to chose from those options only. But that is nonsense. All individuals and company Boards have free will to exercise as they see fit. EDV's initial public announcements was all about ambushing the CEY Board and getting institutional and retail investors on side. Their announcement hid their negatives and omitted key attributes of CEY like the $300m cash and no debt. That means their merger "narrative" and justification were inauthentic. There is no reason for CEY Board to act the wounded, defenceless beast. This flawed offer just confirms CEY's potential either going it alone or with a much better match.
J E-R has played this approach very well and has no need to play to the EDV narrative or meet their demands. It is now up to EDV to share full financial information with CEY Board otherwise their approach is finished and their credibility with it. The PUSU deadline of 31/12 is the only leverage CEY Board has and they should not agree to extend it.
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