Q: Teck is starting to drift downwards again, including a big drop today. Don’t see any news. Any reason you can see for the drifting down? Just fading confidence that an acquisition is going to happen? Seemed like there may be new/different offers on the acquisition the horizon a few weeks ago, has that changed? Would you recommend holding on in anticipation of acquisition offers coming in again? Not in a rush to sell, but don’t want to hold on if pricing is going to continue to move down to pre-acquisition offer levels.
5i Research Answer:
Takeover news has gone quiet, but it often does in these instances. Negotiations may still be ongoing (or not). Now that there has been notice, the involved companies are free to negotiate without additional press releases unless something new happens. The stock drift likely comes from macro pressures and recession concerns as much as impatience on any deal. We can't predict the outcome, but at 7X earnings we would be comfortable holding.