Member Info for StarBright

It’s not just about holders insisting on £XXX. You also need a buyer who’s prepared to pay £XXX! Rarely - if ever - are there “forced buyers”, price insensitive enough to pay whatever holders are looking for, despite the posts on every LSE ‘board insisting that holders have full control and are the de-facto price-setters…

Anyway - we’re some way short of that particular first-world problem at this point. Let’s hope the current momentum is sustained and an offer emerges.

These “PI’s own this company, and we’re not accepting less than £XXX “always make me smile.

If the UK Takeover Code applies (it may not as French company etc) the offeror has to demonstrate that it has the full funding in place before the offer is made. This cannot include cash on the target company's balance sheet.

Shhhh….. We’ll have another outbreak of “Manic mega-Monday, the path to £54!!!” posts…

@Jerryspaniel - POG had an index weight of 0.07%. That’s all the property that has to re-distributed. Even assuming no replacement for POG, the impact on GGP’s index weight would be just 0.07% x 0.75% = nothing.

Well….

@Hydrogen asserts that: “…we all know a circa 20m to 26m buy from GDXJ is incoming on Friday ... this week associated with the rebalance … regardless”

My assertion is that the rebalance won’t lead to a 20-26m buy on Friday 11th, for the reasons I have set out.

We’ll see on Friday (or next Monday I guess as such a trade might be reported late) who is correct. We can come back to this then.

@Hydrogen,

The AP's for the GDXJ ETFs will be buying GGP if there are fund level inflows, which I do expect. They won't be buying because of the rebalance as you (incorrectly) believe. I have explained why this is.

You don't know enough about ETF's to understand how much you don't know...

For completeness, the main impact of the periodic rebalance process is the addition and deletion of index constituents. This can have an immediate impact on trading in the underlying, as was seen here when GGP first joined the index.

@MF11 - the purpose of the periodic rebalance is to define the shape of the baskets that will be exchanged between the ETF and its AP's during the next period. The move to 0.85% tells us that the AP's will have to buy more GGP shares to complete each basket than they would have had to when the weight was 0.75%. As per my first post in the thread, the rebalance impacts only the shape of the baskets that the AP’s and ETF exchange after the implementation date.

An illustration...

- Imagine an ETF based on an index with two constituents; A & B, each trading at 50p per share.
- Each has an index weight of 50%.
- The ETF owns 100 shares of A, and 100 shares of B.
- The ETF itself has issued 100 shares, each valued at 100p.

Fast forward to the first periodic rebalance, at which point A is trading at 60p and B is trading at 40p. The ETF publishes its rebalance, telling us that the index weight of A has increased to 60% and B has decreased to 40%.

Does the ETF have to buy shares of A and sell shares of B? No - because the 100 shares of A that it owns are now worth £60 and the 100 shares of B are now worth £40.

GGP’s weight in the index underlying the GDXJ funds has increased from 0.75% to 0.85%. This doesn’t mean that more GGP shares have to be bought.

Actually @Jerryspaniel, the AP’s (& others) can and do take positions ahead of ETF periodic rebalances. The AP’s can buy and hold GGP shares in anticipation of exchanging them for GDXJ shares at the later date. The outcome of the rebalance (unknown to the AP, but they make their own estimates) impacts only the shape of the baskets that the AP’s and ETF exchange after the implementation date. It’s not front running as they are not privy to information in advance, and their activities are not directed by the ETF itself. This is part of the (clever!) mechanism that works to smooth out the price dislocations potentially arising from the rebalancing process.

The move from 0.75% to 0.85% will have happened BECAUSE of realised price action in index constituents. It doesn’t mean that the ETF suddenly has to go out and buy more GGP shares. It is thus incorrect, @Hydrogen, to state that we “know” that there’s a buy incoming on Friday associated with the rebalance.

As a reminder for other posters in this thread, GDXJ doesn’t buy or sell GGP shares on the exchange. All of the buying and selling is undertaken by the AP’s who are self-directed. As I have explained several times, the activities of the AP’s can create “unusual” price/volume action. In GGP’s case - where the GDXJ ETF’s are the largest single holder - this can be quite noticeable.

Well they are on the wrong end of this one at the moment. Will be interesting to see how it plays out. My understanding is that the owner of the short positions is a primary producer who (in theory) can eventually meet his liabilities with physical. He wants to stay short. He just doesn’t want to post the required margin…

JPM are rumoured to be the principal counter-party for the short positions…

Having said that, it is a technically French company so the UK Takeover Code rules might not be relevant in the event of an offer. I don't know what the French rules require.

So, a MANDATORY offer occasioned by the 30% level being crossed would have to be at least for whatever Biosynex paid for its first tranche of shares during the last twelve months. However this won't happen because if an offer is to be made it will be announced before the 30% is reached. When this happens ( a voluntary offer), the relevant period for determining the minimum consideration is the preceding three months, not twelve.

We don't know precisely the highest Biosynex paid in the last three months, but they crossed the 3% notification threshold in Feb when the price was around 180p. That is the level that I would expect to apply for minimum consideration.

Ignore anyone referring to the 791p level last seen in March '21. It is irrelevant!

@Soder - to be clear (because this is a common misconception on the LSE 'boards), such a mandatory offer must be at the highest price paid BY THE OFFEROR during the preceding twelve months. Not the highest share price during the twelve month period, only the highest price the offeror has paid for shares.

Here's the rule:

9.5 CONSIDERATION TO BE OFFERED
(a) An offer made under Rule 9 must, in respect of each class of share capital involved, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert with it for any interest in shares of that class during the 12 months prior to the announcement of that offer.

Yes, every %.

They can buy up to 30% before they are required to make an offer.

If (prior to this) they approach the NCYT board regarding a potential offer - and the board consider that their approach is genuine / executable etc - then the board have a duty to notify shareholders.

In the absence of either getting to 30% or a credible approach, no-one has to do or say anything.

This story has a long way to run yet…

https://twitter.com/BaldingsWorld/status/1502031532021760004

48.6m = 3.36%, so TR1 expected...

Yes it could @Costa, although I'd expect them to show a little more nous...!

AP's sometimes have baskets to fill against the clock, and can become price-insensitive as a result.