KNOC | DANA Takeover Bid - KNOC Makes Preliminary Approach. | Hannibal

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1st Jul '10 by hannibal

847 comments 208997 reads

Hot off the press:

http://www.ft.com/cms/s/0/2bee2044-852f-11df-9c2f-00144feabdc0.html
http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=3551412
http://online.wsj.com/article/BT-CO-20100701-710080.html

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About the Author

Hannibal

Premium Member

847 comments

repobear

14th Sep '10

Every hour that goes by without news looks more like game over.

In football terms Dana are 2-0 down with ten minutes left. I don't fancy their chances much because KNOC look more like Chelsea than ManU of late.

The big question is will we get to a 1000 posts before the finishing line is crossed. Looking unlikely imv.

Meanwhile Sterling and Encore have struck the equivalent of 15k BOPD on Cladhan and I'm thinking maybe the stratigraphic trap may get to half Buzzard proportions if they find theoil/water contact on the downdip sidetrack.

If they don't find it and go looking with the stepout well planned to be brought forward to Q1 2011 who know?. Not that anyone here gives a toss.

repobear

EdmondJ

14th Sep '10

Because he keeps repeatedly insisting in the media, £18 is full and fair, and is on the record for 'encouraging' KNOC.

I don't see how a fund manager can 'know' this is objectively true, relative to industry, the process is not over. He is too full of himself. He was insisting the offer was 'full and fair' even before allowing the company to publish its defence document; this strikes me as arrogance.

It does prejudice the situation. I am considering accepting the offer purely because Schroder has created this consensus among institutions and the media, such that (without a competitive offer) the deal is likely to go through.

Unless one sells in the market, it could be months before a dissenting holder recieves dues, I would not trust KNOC to observe any timetable to pay out to those not accepting the offer (my SIPP nominee is not even able to send me the bid information).

emptyend

14th Sep '10

Yes - must agree that there is no fawning going on. Though it is slightly surprising that he keeps feeling the need to add his weight to press articles whenever they ask for a quote.

I'd suggest though that this article is also misleading, and that parties on the KNOC side are probably overstepping the mark with some of their claims (by treating hedgefunds as shareholders)...and Schroeders seem to be gilding the lily by rounding their stake up to 16%, when their last RNS yesterday shows they hold about 15.22%.

Perhaps this is all par for the course on hostile bids, but it does seem to me that the KNOC side have been playing fast and loose with the Takeover Panel's Code (perhaps helped by the fact that some of the claims are being made by Korea Inc politicians rather than directly by the company - which is rather unsatisfactory).

sirlurkalot

14th Sep '10

EJ,

I'm sure the SIM fund manager is a busy man, and he's just (probably slightly reluctantly) responding to media questions, rather than proactively going out and "insisting" on stuff. There is no quote in which the word "know" is used, the nearest is "We think that the 1800p offer price is fair". Looking at the actual quotes he's quoted on, none of them seem "too full of himself" to me. Which quoted phrase exactly do you think is out of order?

Does anyone know how long it will be before those who accept the offer in the next week actually receive the £18 in their bank accout?

emptyend

14th Sep '10

Does anyone know how long it will be before those who accept the offer in the next week actually receive the £18 in their bank accout?

Rule 31.8:

Except with the consent of the Panel, the consideration must be sent to
accepting shareholders within 14 days of the later of: the first closing
date of the offer, the date the offer becomes or is declared wholly
unconditional or the date of receipt of an acceptance complete in all
respects.

...which seems clear enough if it proceeds as Schroeders expect.

EdmondJ

14th Sep '10

Not to get into an extended debate on semantics but the man keeps promoting via the media, his point that £18 a share is full and fair, I think investors need some humility as to judging a complex industrial situation - especially when he hadn't even seen the defence document. That summed him up philosophically, for me, he was not prepared to wait for the defence document - and jumped to dismiss it sooner than he could have digested it.

All this from a man who thinks one of the best UK stock picks is Taylor Wimpey... credibility is quite lost there, for me!

Still, if the industry does not offer better terms, what we would then know in terms of industrial valuation is that control can pass at £18 a share. Intrinsic value is obviously higher otherwise KNOC would not be so motivated.

EdmondJ

14th Sep '10

Re. Rule 31.8,

Splitting hairs but quite important as to timing perhaps, there is a difference between being declared conditional and wholly unconditional? i.e. those who accept the offer may not be waiting 14 days from it being declared unconditional, but wholly unconditional, which could be some weeks later.

This is relevant in terms of the opportunity cost i.e. consider not accepting the offer in order to retain flexibility to sell in the market (for a stock switch). The price won't fall back significantly, this being a centre of arb attention.

slartybartfast

14th Sep '10

Would be interesting to know how they organise these things. I have a fair chunk held via Selftrade and suspect that the interposition of a nominee has headed off any call to me.

I wondered the same as mine are held via TDW.

AnonymousUser858

14th Sep '10

Repobear said

"...If they don't find it and go looking with the stepout well planned to be brought forward to Q1 2011 who know?. Not that anyone here gives a toss...."

You obviously care a great deal - does that mean you are the sort of person who might be expected to give tosses?

repobear

14th Sep '10

Yes indeed tournesol,

I do give at toss about making money and thought that was the main purpose of bulletin boards.

However I've been wised up on that one somewhat by this thread which has added less value per syllable than just about anything I've read for a long time. The ones who have made money, made their point after getting in on the news of the bid and made their point after getting out, took their profits, and moved on to make more money again.

There has been some serious, well thought through debate but really it has gone on far too long, been overloaded with emotion and has had an opportunity cost for the particpants.

DJP is the best example of those who have contributed to his thread, read the sitaution well and made money from it and with the money taken out of it, I reckon. His thread in where to go after Dana which for weeks has been more deserving of response than this one has been virtually ignored.

I hope you find some suitable home(s) for your Dana money and don't take the points I've made personally.

repobear

JPGH

14th Sep '10

Debate here has been informative, emotional and very straight as well.

Dunno if I posted this here (Or elsewhere) but I sold up all DNX (spreads and paper) approx 2 weeks ago for 1807p or so and put 80% of this into EO at 78p and rest as my ISA 2010/2011 contribution which remains unspent for now.

I suppose if you wanted to call a winner here you could say the DNX sceptics/agnostics have been clear winners so far (unless a WN appears or AM comes in and TC/Shareholders reject the KNOC approach).

I was tempted at 1650p and 1700p to get out and only hung in/clung on as a result of some excellent posting here which reassured me somewhat to stay on longer (I am not a big DNX fan and would definitely fall into the agnostic camp).

It will be a shame when DNX does go under the hammer as it will concentrate the UK listed pool again with one less stock that I can invest in without having to do too much of my own research. I am seeing in near term a similar situation develop with TLW, a company in which I am a devotee (maybe not quite on T's level though!!), but this thread has taught me to be much much colder and detached when deciding when its time to bid adieu and sell up.
£20 for TLW and the oral foam will be very visible from a distance.

Anyway onwards and upwards. GKP is looking a bit hot lately....recently overtook TLW as my largest holding.

JPGH

emptyend

14th Sep '10

I do give at toss about making money and thought that was the main purpose of bulletin boards.

Yes it is. But the main topic of THIS thread is Dana. If you want to talk about Encore and Sterling there are perfectly good threads available for that - but don't expect to get thanks here for trying to push the attractions of Encore and Sterling (even though it would have been perfectly possible to have made much more money by owning them rather than Dana at various points in recent weeks!)

However I've been wised up on that one somewhat by this thread which has added less value per syllable than just about anything I've read for a long time. The ones who have made money, made their point after getting in on the news of the bid and made their point after getting out, took their profits, and moved on to make more money again.

I don't think that is quite fair. There was a lot of two way interest at £14+ and various people departed at £17 and then more at £18 or more. Some have hung on because they think there may be another better bid to come (though the chances of that are indeed now diminishing fast). All these points have been covered in the course of this thread. Deciding when to exit this situation is largely a matter of reading the runes correctly - and there are plenty of people who sold at c 1450p..... and left 25% or so on the table for just a few weeks of staying put. Perhaps we may find that some of us could have sold at 1820p but will get only 1800p though having waited too long - but that will hardly be a disaster, even if (ex-post!) one can very clearly see opportunities elsewhere that have perhaps been missed by so doing. Thats life!

There has been some serious, well thought through debate but really it has gone on far too long, been overloaded with emotion and has had an opportunity cost for the particpants.

It may be that the bid scenario isn't yet quite all done and dusted.....we won't know for another week. If it turns out to be "all over" then yes, you'll be right.....time will have been wasted and opportunities missed. But apart from the occasional diversion I don't see much emotion.....in fact probably less emotion than from those who have frantically been trading every twist in the Encore/Sterling story. Here is what someone posted elsewhere yesterday:

SLG sluggishly away like the speed of Rooney away from a hotel after 6 minutes of filmed fame with a couple of tarts.
Up 6.5 cents so far. I've bought some more at 2.80 to 2.87............

Look and listen to the above links if you haven't already people.

SLG is geared at 78c to Encore's 10p on Cladhan. It risen about a dollar to Encore's 30p since the first announcement. That looks to be about 35% short of where it should be and Encore jumped 5p before the announcement. Encore is priced about right in my view on news to date.

PS It's a free bet for Cladhan whatever size it comes in at.

I'm probably not looking in the right place, but my screen seems to show a latest price tonight of $2.70 (down 6.6%), so it would seem that it isn't just those of us on the Dana thread who are failing to enthuse.

I've got no view on SLG or EO by the way. I have had a view on DNX - even though it looks likely that the latter stages of my thoughts will have been inexpensively in error.

rgds

nigelpm

14th Sep '10

However I've been wised up on that one somewhat by this thread which has added less value per syllable than just about anything I've read for a long time. The ones who have made money, made their point after getting in on the news of the bid and made their point after getting out, took their profits, and moved on to make more money again.

I disagree repo.

Whilst the share price hasn't done much that doesn't mean the value in what's been posted here hasn't enhanced everyone's understanding. I've learnt a lot about the mechanics of bidding for example.

But I've also been reading atuff elsewhere as well. Surely you don't have to read this thread if you don't want to but what's the harm in others discussing the pros and cons.

It's not 100% about making money.

repobear

14th Sep '10

ee,

That last point hadn't escaped my attention but there again we would probably agree that E&Ps are proving difficult for markets to value and if you haven't got a view on 40% of 15000 BOPD equivalent in the North Sea then that's fair enough.

As regards your point about emotions, I am greatly encouraged by that. I recall you making similar points just after the Catcher discovery was announced. That investment hasn't done too badly the last 15 weeks or so. Let's hope your magic works again;-)

http://www.stockopedia.com/contributors/djpreston/

nigel,

With the pool of UK companies becoming smaller maybe it's time for people to cast the net a bit further. Of course this is often easier when it links into some existing pool of knowledge.

If anything significant happens I'll be back to congratulate the old stalwarts here but in the meantime I'm out of here.

repobear

sirlurkalot

14th Sep '10

There's been plenty of knockabout fun on this thread, and though I agree plenty of syllables have been written that haven't been optimised on making money, it's been entertaining. I now know what "romantic" investing is, for instance. I no longer have any involvement in Dana, but it's entertaining to hang around until the denouement. IMO repo's a bit harsh, but i can relate to the point he's making.

EdmondJ

14th Sep '10

Having looked through the offer documentation I cannot find any direct reference to the percentage level where KNOC would declare the offer unconditional, which appears to fall short of the textbook.

At day 21 the offeror would review the percentage accepted 'with regard to its declared acceptance level at which the offer becomes unconditional' and if reached then declare the offer 'unconditional as to acceptances'. Any offer must then remain open for 14 days to allow dissenting shareholders to sell their shares - however I do not know if that means in the market or by accepting the £18 offer.

All this may seem unduly technical and quite irrelevant to those who would rather jump elsewhere ASAP, but applies to those seeing this offer through to its conclusion - yet wishing to avoid a delay getting money out of KNOC.

davjo

14th Sep '10

....this thread which has added less value per syllable than just about anything I've read for a long time

Well I for one have found it fascinating and most instructive as to the various angles put forward but then, unlike you it seems, I'm interested in the intricacies of a rare hostile situation, something we haven't seen in the UK E&P sector for the 15 years I've been following it. You can learn an awful lot more about valuations and the logic behind the market price being paid than you can from analysts estimates or SLG BB ramps.

davjo

14th Sep '10

Edmond

Not sure if it's 75% or 90%. However, since 50%+ commitment to accept will snuff out any possibility of a counter offer (unlike an agreed bid), I expect faltering holders will give in pretty quickly and the matter will draw to a very rapid conclusion, the "unconditional" threshold being pretty irrelevant. I personally don't see any hold up in payout.

I think the moral of this story is that TC misread the cards he was holding and he probably could have got a bit more, even 50p, by signing up to an agreed bid allowing more time for the possibility of a counter offer, even though that may have been wishful thinking.

As to Schroders, one has to bear in mind they aren't going to sit there holding forever. Their best opportunity to crystalise value was always going to be a sale of the company....a fairly rare event. At what point could they see a sale in future if they spurned KNOC's offer now? It's not as if Dana had a clean cut portfolio without considerable abandonment liabilities etc. What would you do if you had control over their £280m interest in the company? How are you going to bring that money safely home?

oilretire

15th Sep '10

Much smaller, a quarter, that's why I was so surprised to get a call. . DNX are way behind the top holdings in my folio, probably 6th or 7th in size.....

marben100

15th Sep '10

I'm interested in the intricacies of a rare hostile situation, something we haven't seen in the UK E&P sector for the 15 years I've been following it.

Wakey, wakey... ;0))))

http://scotlandonsunday.scotsman.com/business/Centrica-closes-in-as-Venture.5536638.jp

THE City expects Centrica's hostile takeover bid for Aberdeen-based oil and gas exploration company Venture Production to get the go-ahead from shareholders

I seem to keep getting my valuable assets stolen on the cheap. :0)))

Cheers,

Mark

PS, many congrats on the ruby. Hope you & your other half had a great time.

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DANA takeover bid - KNOC makes preliminary approach.

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Hannibal

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