greencore tender offer

Discussion in 'Investments' started by wheeler dealer, 31 Dec 2018.

  1. wheeler dealer

    wheeler dealer Registered User

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    15
    Got details in post about tender offer ,what happens if i do not participate in this .If i choose to participate i presume it means i sell all my shares at £1.95 and am done with the greencore shares .If that is so it looks like a raw deal!!
     
  2. Deccla

    Deccla New Member

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    1
    I hold some greencore shares but have no idea what this all means or what my options are. What happens if you don't tender your shares.
     
  3. Cathy8

    Cathy8 New Member

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    2
    Today’s price is £1.85. So the tender price is only 10p higher. Not much of a premium??
     
  4. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: 6 Jan 2019
    When it was announced the share price was €1.66.

    So they announced a price of €1.95 , a premium of 17.5%, to make it worthwhile.

    You do not need to make a decision on this until late January and should not do so until then.
    upload_2019-1-4_14-23-51.png

    If the share price is in excess of €1.95 on the market, you should not opt for the tender as you would be better off selling them in the market.

    If the share price is a lot less than €1.95 you should probably apply to sell all your shares.

    If I understand it correctly, you will be entitled to sell 37% of your shares automatically. However you can apply to sell 100% of your shares and they will buy more than 37% from you if others do not take up their entitlements.

    So let's say on 20th January you have 100 shares and the share price is €1.50


    upload_2019-1-4_14-36-55.png

    So if you do not offer to sell your shares, the total value of your investment will fall.

    "But I think Greencore has a great future and I want to hold onto my shares!"
    You should still sell as many shares as you can at €1.95 and then buy them back in the market when they fall to €1.23

    What if the price in the market is close to the tender price, say €1.90?

    Then it's probably not worth doing. It will cost you about 1.5% to buy back in if that is what you intend doing.

    What about Capital Gains Tax?
    You will pay Capital Gains Tax on the difference between the proceeds received and the price you paid for them.

    If you buy them back again at €1.23, then you will have a new base price for future CGT calculations for the 37% of shares you bought.

    The first €1,000 of gains is exempt if you have not already used it.

    If you have realised Capital Losses on other shares or other property, you can set those losses against your gains.



    Brendan
     
    Last edited: 6 Jan 2019
  5. Cathy8

    Cathy8 New Member

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    2
    Are you saying that the share price will drop to £1.23 after the tender offer? Have I missed something?
     
  6. wheeler dealer

    wheeler dealer Registered User

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    15
    i taught that we can not speculate on share price
     
  7. Brendan Burgess

    Brendan Burgess Founder

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    36,813
    11 We don't discuss individual shares
    You won't find any messages suggesting investing in CRH or asking if AIB is a good investment. It is not the purpose of Askaboutmoney
    . We don't facilitate stock tipping or speculation about the future performance of individual shares. There are other forums which discuss individual shares such as The Investments and Markets Forum of boards.ie

    This guideline does not restrict you from discussing
    1) the mechanics of buying or selling shares in a flotation
    2) Rights issues - pricing and mechanics
     
  8. Brendan Burgess

    Brendan Burgess Founder

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    Hi Cathy

    The example I gave was if the share price is €1.50 before the tender offer, then it should fall to €1.23 after the tender offer is completed, all other things being equal.

    If the share price is in excess of the tender price of €1.95 , then you should not tender any shares.

    Brendan
     
  9. boltownes

    boltownes Registered User

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    43
    You can buy shares to participate in the offer up to 29 January. It looks to me that is what is happening given that the share price has increased to stg 1.90. What is to stop the share price falling significantly once the deadline is passed?
     
  10. Brendan Burgess

    Brendan Burgess Founder

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    If the market values the shares today at £1.90, there is no technical reason related to the tender offer for the share price to fall significantly.

    We do not speculate on the value of shares, other than technical calculations such as this.

    But if you think that you know better than the market and that the share price is going to fall significantly, then you should sell your shares now at £1.90.

    Brendan
     
    boltownes likes this.
  11. boltownes

    boltownes Registered User

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    43
    Brendan, can you show us the calculations for this example? I'm still confused!
     
  12. Brendan Burgess

    Brendan Burgess Founder

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    36,813
    This is how it works based on today's price of £1.91

    upload_2019-1-22_12-30-57.png


    After the transaction is completed, all else being equal, the share price should fall 2p. But all else is not equal, so the shares will rise or fall by a greater amount.

    Brendan
     

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  13. mtk

    mtk Frequent Poster

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    447
    Last edited: 23 Jan 2019
    I have a small Number of shares.

    Doesn't this tender with guaranteed price of 1.95 mean the market price will be at or above 1.95 as we approach the cut off date next Tuesday regardless of any investors view of underlying value ? Or am I missing something ?
     
    Last edited: 23 Jan 2019
  14. Brendan Burgess

    Brendan Burgess Founder

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    36,813
    Hi mtk

    Why?

    You can sell only 37% of your shares.

    So let's say that the "correct" value is £1 per share but the market bids them up to £1.95 for technical reasons and they will fall to £1 "ex-rights".

    Well if you buy 100 shares for £1.95, after the deal you will be left with

    cash of £72 (37 x £1.95)

    And 63 shares worth a lot less than £1.

    So you will have lost 95 pence per share on 63 shares.

    It probably does provide some support for the share price, but not that much.

    A rights issue or a tender offer should not affect the overall wealth of the shareholders. Their cash + shares beforehand should equal their cash + shares afterwards.

    Brendan
     
  15. mtk

    mtk Frequent Poster

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    447
    Last edited: 23 Jan 2019
    Hi Brendan I see your point
     
    Last edited: 23 Jan 2019
  16. Brendan Burgess

    Brendan Burgess Founder

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    The price now is £194.9

    I am wondering about my analysis now.
    That is so close to the £1.95

    All other things being equal, the share price should not change after 1 pm today.

    Brendan
     
  17. Brendan Burgess

    Brendan Burgess Founder

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    36,813
    Well all other things are not equal.

    They issued a trading update this morning. But that will have a bigger impact on the share price than the tender offer.

    Brendan
     
  18. Brendan Burgess

    Brendan Burgess Founder

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    36,813
    The price now is £1.99

    So the market price is higher than the tender price.

    I presume it's due to the underlying business factors and not the tender offer.

    Brendan
     
  19. Brendan Burgess

    Brendan Burgess Founder

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    36,813
    It was oversubscribed

    https://www.agriland.ie/farming-news/509-million-greencore-tender-offer-oversubscribed/

    Qualifying shareholders that tendered ordinary shares equal to or less than their individual basic entitlement will have their tender accepted in full.

    Qualifying shareholders who validly tendered in excess of this will have their tender accepted in respect of their individual entitlement, plus approximately 74.76% of the number of ordinary shares validly tendered in excess of entitlements.