Q: Based on responses to previous questions on PNG's acquisitions, I'm trying to understand the dynamics of what might happen to the stock price going forward. The closing of the new share issue at $8.50 should close around March 12 and if I have it right, the shares will be active when the deal closes, expected in the April - June timeframe. The new issue has brought the share price down to the issue price as you previously indicated it could. Once the issue closes this week, is the weight lifted from the stock price and could it start to react positively or negatively to the deal? It seems the market likes the deal so is it reasonable to assume the share price might start recovering the 75 cents it lost starting after issue close? I realize there are no absolute rules as to what might/will happen.
5i Research Answer:
The closing of the issue is not likely to do much, in our view. That's because the shares do not become shares really until the deal closes. The acquisition close could add 50c or so as uncertainty is removed. But the shares we think from here will just trade as usual, with moves based on news, earnings and the market in general. We would not try to play things too cute. The acquisition we think is the right move. The sector outlook is good, and new contracts will likely be on the way.