Friday, December 28, 2007
Capitulation on Symbion
Primary Health Care (PRY.AX) extended their takeover offer for Symbion Health (SYB.AX). The takeover is for $4.10 in cash but Symbion is trading at $A3.98. Primary currently holds around 35% of the company. Healthscope (HSP.AX) whose previous takeover bids collapsed holds over 10%. I've been waiting for something new to happen in this ongoing saga while paying margin interest to fund my position. Symbion's board says to reject the offer but hasn't come up with any alternative. Maybe I could get more by hanging on, but that's not what the share price says so I prefer to take the certain $A4.10. I'll have to record a $A90 short-term gain as I bought 2000 shares at $A4.04 after the original takeover emerged and a long-term capital gain of $A3,578. I first bought into Symbion (as Mayne Nickless) on 17 February 2000 and that block is still on my books.
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3 comments:
I'm still waiting to see if PRY increases it's offer or something else develops. I'm not sure that accepting the offer is a "certain" $4.10 either - the PRY offer is conditional on getting 90% acceptance, which is doubtful given HSP's 10% stake. By accepting the current SYB offer you lose the ability to sell on market. So, in the worst case Symbion could spike up to, say, above $4.20 on rumours of an increased or competitor bid, and you wouldn't be able to sell at that price if you've sent in the paperwork to accept the PRY offer. If the rumour then turns out to be false, and the SYB isn't increased and eventually fails to meet the required 90%, you could wind up stuck with the Symbion shares when the offer period ends.
On the bright side, I think that those who have accepted the PRY offer at $4.10 would get the higher price if PRY does eventually decide to increase their offer price.
On the downside, I think it's quite possible that PRY could make their offer unconditional if they reach more than 50% acceptance. This would leave them with a controlling stake and a clear desire to eventually "mop up" the outstanding shares. As they apparently bought SYB for $4.18 on market prior to announcing their takeover bid, a later bid to get full ownership would probably be at a somewhat higher price. Of course, whether or not it turns out to be worthwhile holding out for a higher price depends on the cost of the funds borrowed to purchase your SYB shares. If you're paying around 10%pa on the borrowed funds, it's not worth hanging on for more than 3 months in order to get $4.20 instead of $4.10.
I'll have to check the documentation but my impression was that individual shareholders were selling their shares to PRY for the $A4.10 price. Based on this:
http://www.asx.com.au/asxpdf/20071228/pdf/316qk7vvvz903n.pdf
they say that their interest has increased due to acceptance of the offer - institutional acceptances are being listed separately. Also they said earlier that if we accepted by a certain date we'd get our money quicker. So seemed like they were paying for sure.
You're right - these guys are really tricky... hmmm... I don't think a better offer is likely to come along though given how the share price is performing. Very different from the Mayne Pharma case.
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