by Travis Johnson, Stock Gumshoe | May 15, 2013 12:38 pm
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Source URL: https://www.stockgumshoe.com/2013/05/lonrho-gets-low-enough-for-a-takeover-bid-what-to-do/
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Any advice for those of us who own the pink sheet issue? I thought I’d put an ask out there for $0.15, a small discount from the 9.90 pence($0.151) London share price, and had only a tiny amount filled. What would happen were I to hold the pink sheets until the deal is consummated – would these shares be sold on my behalf automatically, or would I be left holding worthless paper?
I’ve expected all along to have to sell at a discount due to the illiquid nature of LNAAF, just as I paid a small premium to purchase, just wondering how to best settle.
I own some of my Lonrho holdings as pink sheets shares. As acceptance of the takeover settles, I expect there would be arbitrageurs willing to buy your shares and either hold to the takeover (not sure when it might be, it could be a lengthy process since they have to have a vote) or sell into the more liquid UK Market. I don’t know if that small of a discount will get them nibbling or not, it may be that we’ll also see the shares rise to closer to the 10.25p offer but, again, that depends on certainty and timing.
Shares should be treated the same in the end, regardless of which exchange they’re bought on, but I don’t know how long it might take (presuming the takeover goes forward) for the cash transaction to get through to foreign holders. In some cases I’ve seen this take several weeks longer than expected, and sometimes, for small companies, folks have had to call their broker to check up on the transaction.
Like you, I will most likely plan to offer my pink sheets holdings at a discount to the London bid — these transactions where your buyer is trying to scalp a penny or two in the transfer of shares back to London almost always happen only when London is also open for trading and the buyer has more price certainty, so don’t be surprise if there’s no pink sheets action after the London close — I think that’s now at 11:30EST.
Thanks Travis, very much appreciated.
For what it’s worth, looks like a lot of folks in similar state today — a couple million LNAFF shares traded today, the average is probably less than 100,000.
Yahoo finance shows that last flurry of transactions broken out:
12:28 – 0.1504 – 2,297,400 shares
12:29 – 0.1400 – 10,000 shares
and yet only about 5% of my shares sold at 0.15 even. Not that I’m the cynical type by nature, but….
It looks as though the shares have been shorted for the past three weeks, driving the price down for others to buy cheaply. The predator company , FS Africa , was only registered as a private limited company in UK on 24April, just over 3 weeks ago. I’m pretty annoyed since I have accumulated these over several years at an average of 21p so stand to lose out. Keep an eye out to see how many of the Lonrho board and key players end up with appointments in FS Africa. Frankly this is a disappointing outcome for a lot of very patient optimists.
Just had a fill on a moderately sized block of shares, sold at 0.1475.