Q: Follow up question
If there is no premium for Teck why would management agree to takeover deal. Can you please give us the details of the deal is there a stock deal or cash and stock
If we consider the special dividend Anglo plans to shareholders prior to closing (which will impact the value of shares received as they will decline post-dividend) the deal is essentially at a 0% premium to TECK shareholders. The market is making the assumption that there will either be another offer or new bidders. Thus, we would hold for now.
Thanks for your advice
If there is no premium for Teck why would management agree to takeover deal. Can you please give us the details of the deal is there a stock deal or cash and stock
If we consider the special dividend Anglo plans to shareholders prior to closing (which will impact the value of shares received as they will decline post-dividend) the deal is essentially at a 0% premium to TECK shareholders. The market is making the assumption that there will either be another offer or new bidders. Thus, we would hold for now.
Thanks for your advice
5i Research Answer:
TECK has been more or less up for sale for some time and some premium has been in the shares because of this. The deal is for a 100% share exchange, so management believes the combined company offers good opportunity for growth and shareholders can participate via shares versus simply cashing out. Each TECK share will get 1.3301 Anglo shares. While the 'stated' premium is 17%, it all depends on how much Anglo shares fall after the special dividend is paid. Right now, we think there is an opportunity for another company (if interested) to make a competing offer.