Bacanora (BCN) 15% + upside: Ganfeng confirm 67.5p offer + additional shares 25/08 :)

soulsaver

At 57.75 now 13.30 02/06/2021 Seems maybe too easy?
Am I missing something, other than collapse risk if the offer isn't accepted/withdrawn?
Declaration: I have had a nibble with a bit of my 'dips/speculation' money.

Malthusian

Given that you would be looking at a ~33% loss if Ganfeng withdraws its bid and the company falls back to its pre-bid share price, that's hardly a trivial risk.

underground99

soulsaver said:

At 57.75 now 13.30 02/06/2021 Seems maybe too easy?
Am I missing something, other than collapse risk if the offer isn't accepted/withdrawn?
Declaration: I have had a nibble with a bit of my 'dips/speculation' money.

*If* the company making the conditional offer likes what they see in their due diligence and all approvals are obtained etc etc and the offer is final and recommended, there is only ~17% upside, and the company announced it could take 8 months or so to be concluded, and there's no certainty it will definitely happen, and you're right that if it doesn't happen, the price is likely to fall from current levels because the offer price was higher than the prevailing market price pre-offer.

You could probably look around the stock markets and find other opportunities which have a 17% upside potential by the end of the year together with risk of loss.  The market has priced-in the execution risk, which is why the shares are changing hands for only 58p rather than 67.5p.   If you think you can read the probabilities and conclude that the fair value of the shares at their current position is more than the 58p it costs you to buy more of them - then buy more of them. It is only 'easy money' if your predictions come true...

HansOndabush

Ganfeng have already invested in Bacanora; I'd say its odds-on to go through but we'll know more tomorrow. From the RNS

"In accordance with Rule 2.6(a) of the Code, by not later than 5.00 p.m. on 3 June 2021, Ganfeng must either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer"

Also seems a low-ball offer so will likely happen. I think a buy at 58p with likely upside of 16% + within a few months is a good bet. I'll take it.

soulsaver

Malthusian said:

Given that you would be looking at a ~33% loss if Ganfeng withdraws its bid and the company falls back to its pre-bid share price, that's hardly a trivial risk.

I think I covered that one and I didn't seem to postulate it was trivial - there is no risk I consider trivial. So, for the hard of hearing - this was just info - not a pump and dump - not a recommendation - dyor. 

And for the poster who thinks they can find similar, let's see 'em then...

Malthusian

HansOndabush said:

Ganfeng have already invested in Bacanora; I'd say its odds-on to go through but we'll know more tomorrow.

The market agrees with you - an £18 return on every £100 if it does go through vs a £28 loss if it doesn't (at current prices; obviously it's a big assumption that if it doesn't go through it'll drop back to the pre-bid share price, but it's the best we've got) is roughly equivalent to a 2-3 odds-on bet. (You have to wager £3 to win £2.)

Of course this is a very rough equivalence and pretends the only factor affecting Bacanora's share price is the takeover bid.

HansOndabush

There was a huge fundraising at 45p which is probably the floor if the bid fails. Four years ago the price was north of 100p so still potential to move up on 'green energy policies' without a bid.

But Ganfeng have invested heavily here; todays RNS re. the AGM makes it sound like a completely done deal i.e. they will take no questions on the takeover. Not good for long term holders who got in above the offer price but the odds look good for a gain of some sort here if you buy today.

HansOndabush

No decision today then; deferred for another month:

https://www.investegate.co.uk/bacanora-lithium-plc--bcn-/rns/pusu-extension/202106031009527283A/

soulsaver

c20% gain for me in 3 months +c. 9% for share exchange. 
Gimme a few more of those... 

BCN | 65.75 +10.40p +18.57% (hl.co.uk)

soulsaver

Summary:

RECOMMENDED CASH OFFER 

FOR

BACANORA LITHIUM PLC 

BY

GANFENG INTERNATIONAL TRADING (SHANGHAI) LIMITED

Summary and highlights

·    On 6 May 2021, Bacanora Lithium PLC ("Bacanora") and Ganfeng International Trading (Shanghai) Limited ("Ganfeng") announced that they had entered into an agreement (the "Offer Agreement") regarding the terms of a possible offer by Ganfeng for the entire issued and to be issued share capital of Bacanora (other than the shares which Ganfeng already owns) at a price of 67.5 pence per Bacanora Share (the "Possible Offer") ("Possible Offer Announcement").  The terms of the Offer Agreement specified that the announcement by Ganfeng of a firm intention to make an offer for Bacanora was subject to the satisfaction of certain pre-conditions.  Bacanora and Ganfeng today confirm that the final outstanding pre-condition has been satisfied.

·    The Bacanora Independent Directors and the Ganfeng Board are therefore pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Ganfeng for the entire issued and to be issued ordinary share capital of Bacanora not already owned by Ganfeng (the "Offer"). The Offer is to be effected by means of a takeover offer within the meaning of Part 28 of the Companies Act 2006. Ganfeng reserves the right to elect, with the consent of the Panel, to implement the Offer by way of a scheme of arrangement under Part 26 of the Companies Act.

·    The Bacanora Independent Directors also intend to make a distribution in specie, comprising the Zinnwald Shares currently owned by Bacanora, to all Bacanora Shareholders (including Ganfeng) on the record date, being the date the Offer becomes or is declared unconditional. The Zinnwald Distribution will be conditional on (1) the approval by the Bacanora Shareholders, Red Kite (under the terms of Bacanora's US$150m senior debt facility) and the Court of the Reduction to create distributable reserves sufficient to make the distribution, (2) the approval by the Bacanora Shareholders and Red Kite of the distribution in specie, (3) the Offer becoming or being declared unconditional, and (4) the expiry of the regulatory lock-in restrictions relating to the Zinnwald Shares that are currently applicable to Bacanora.

·    Bacanora Shareholders will therefore be entitled to receive:

for each Bacanora Share:      67.5 pence in cash from Ganfeng pursuant to the Offer (the "Cash Consideration")

and

0.23589 Zinnwald Shares to be distributed by Bacanora (the "Zinnwald Distribution")

·    Based on the Closing Price per Zinnwald Share of 25.75 pence on the Last Practicable Date, the Zinnwald Distribution is equivalent in value to 6.1 pence for each Bacanora Share, resulting in Bacanora Shareholders being entitled to receive, when combined with the Cash Consideration, a total value for each Bacanora Share of 73.6 pence (the "Acquisition Value"). The Zinnwald Distribution represents an additional 9.0 per cent. of value to Bacanora shareholders over the Cash Consideration as at the Last Practicable Date.