Q: I was just wandering with this company having a take over price close to its share price, if let’s say the market goes down 15-20 % would this company have a cushion so to speak because of their impending offer or would it get hammered like other stocks ..just curious..thanks
5i Research Answer:
No takeover is 'done' until the cheque clears. But here, there is a 1.65% gain still to be made from the current price. It is a friendly, all-cash deal. It still needs regulator approval, but we would consider it a fairly safe bet overall and would not expect any issues. IF the takeover fails (such as an issue discovered with due diligence, for example) the stock would take a hit, but it is not likely to fall much in a normal market correction. In a market crash scenario like 2008 it could fall further, but a crash would not necessarily impact the takeover. In 2008, some takeover companies traded well below their offer price as investors panicked, but most deals still closed.