A quick update on Andor Technology (LON:AND), a stock I liked but didn't buy when I looked at it last month. They're a very niche producer of extremely high-specification cameras used mostly in science and research, and have an interesting history going back a few years - a bit more on that in a minute. My regret at not buying Andor is fairly obvious given the events of the last few days; Oxford Instruments, the listed Oxford Uni spin-out (plenty of parallels with Andor here) announced a 500p offer for the company. The share price jumped on the news - from about 400p to closing today at 495p.

There's two interesting sides to this story, so I'll briefly cover both.

Oxford Instruments' Insistence

Share price movement when a bid is announced is always interesting, because it becomes an arbitrage game. How long will the deal take to close? Will the deal close at all? Will the price be improved or worsened by the bidder? All of these factors have to be priced into the stock almost immediately. It becomes a game of weighing all the competing factors and coming up with a price which fairly discounts them all. Here's what's interesting about Andor, then - the price has shot up to 495p against a takeover bid of 500p, and there's still resistance by the board - so the deal doesn't seem likely to close soon. Why would anyone hold a stock for a potential 1% gain (sans all trading costs - which will push it negative) at some point in the future, when the deal is resolved?

You have to infer that the markets are pricing something else into the equation. The blunt answer is the expectation that Oxford Instruments will, once again, raise their offer. Their previous form in this is a big indicator; here's the pertinent paragraph from the offer statement: 

Oxford Instruments and Andor have been in discussions since 9 July 2013, when Oxford Instruments sent a letter to the Chairman of Andor setting out the strategic rationale for the transaction and an indicative proposal of 420 pence per share in cash, subject to due diligence...  On 7 September 2013, Oxford Instruments informed Andor that it was prepared to increase its indicative proposal to 470 pence per Andor share, subject to due diligence...  Andor subsequently granted…

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