share price on takeover

theoretica

On Friday it was announced that Nikon was putting in a cash offer to buy Optos at 340p and the share price promptly jumped to about 341.5p. Why would they go to over the offer? Are Nikon allowed to buy up shares so they can vote on the takeover themselves? Or are people betting on the 340p offer being refused?

I will be grateful to anyone who can point out what I am missing about how the market works.

http://www.hl.co.uk/shares/shares-search-results/o/optos-ord-gbp0.02/share-charts

bowlhead99

Just because Nikon have said they would pay 340p and the directors have recommended the shareholders take it, doesn't mean that they would not offer more or that another party would not offer more, if the vote is not passed.

The offer is 30-40% higher than recent share price but that doesn't mean it is a 'fair' offer from the perspective of what shareholders could make by keeping the company or what Nikon could make by buying the company. At the moment only ~13% of shareholders (the directors and one major investor) have said they would definitely vote for it.

So, the market price will continue to reflect what people are willing to pay to buy a share or what they would want to receive to sell a share, given the new information announced on Friday.

theoretica

Thank you - so people betting on the 340p offer not going through and presumably going to vote to reject it. The logic that if Nikon are prepared to offer 340 it is because they think it worth more has a certain direct appeal.

gkerr4

You don't mention this, but if you are in profit by a good % then (IMO) you should consider banking the profit.

The share price will already be inflated due to opts being considered a takeover 'target' - if anything does go wrong with the deal you might expect the optos she price to take a beating.

It can go either way, but from experience if you are showing a good profit, consider taking some / all of it. Just my 2p.