LON:CHOO | Jimmy Choo Takeover - Some Advice, Please!

26th Jul '17 by Lord Zion

6 comments 2438 reads

Hello there.

Being a year in to this trading malarky, I yesterday experienced the first takeover bid on a share held: Jimmy Choo (LON:CHOO)

After the initial excitement of a price jump waned, I wondered how best to deal with this - should I sell or hold on to see if it rises post-sale.

Judicious Googling didn't reveal very much, so I thought I would throw that question out to you.

I would be interested in hearing your experiences of takeovers, good and bad, so it may help me to decide.

Many thanks!

Zion

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Lord Zion

Premium Member

6 comments

Carcosa

26th Jul '17

Nearly 70% of the shares have committed to the take-over price. 75% is required for the deal to succeed so in real world it's a done deal. Offer price is 230p and current share price is 228.6p The small difference clearly shows the market considers the deal to finalised at 230p and that small difference probably reflects the time value of money.

Hence sell your shares now is the thing to do.

doug2500

26th Jul '17

OTOH if you're sitting on piles of cash already you might as well let it run it's course for the tiny bit extra. You won't get anything in a broker's account.

I have done both in previous occasions. Depending on such things as other opportunities and which tax year I want the gain in.

Benson212

26th Jul '17

I was also a holder of Jimmy Choo (LON:CHOO) and like yourself, was chuffed a takeover bid actually materialised at premium to the (then) current share price. I sold out for 229 pence this morning because I want to keep my money churning in the market (and growing). I've used the proceeds of the sale to buy into the share price surge at Burford Capital (LON:BUR) .

As Carcosa stated above, it looks a done deal so I think the share price will go sidewise for a while before de-listing.

Congratulations & Good Luck!

Lord Zion

26th Jul '17

Thank you all for the considered replies. I may have phrased my question badly, however. Want I really want to know is if there were a general pattern when companies are taken over? ie, they trade sideways until takeover and then the price rises / lowers / goes sideways then does something.

Seems to me that there are certain events that are (relatively) predictable (apart from when they aren't!). For example, most IPOs tend to shoot up initially then find their level. Wondered if there was a general, similar pattern on buyouts.

And BH1991 - Burford is awesome. I bought in some while back and they really seem to know what they are doing.

Rusty2

26th Jul '17

I would say generally when bid is announced the price goes up to close to the takeover price then goes down somewhat as people sell and not many buy, some bids do fall through, so I generally sell early, only if another bid appears will you lose out.

sharw

26th Jul '17

Since you are new to this a few words of explanation. There are two ways a company can be taken over: a straight bid where the offering company asks you to sell it your shares (this has its own rules) and the one which applies here - a Scheme of Arrangement under the Companies Act. This requires votes so that 75% of shares are voted in favour and also 50% of shareholders - this is the one time the small shareholder is as important as the large one. If the votes go through then all shareholders are bound by it - you are not allowed to retain your shares.

As others have pointed out this is a "done deal" because of the 69% "irrevocable undertakings". it is important to look at the terms of these. Sometimes they include a clause allowing them to be withdrawn if another bidder offers 10% more but that is not the case here so the market is assuming it will go through. This gives you a choice - you can sell now if you have some good use for the money or you can wait until it goes through and get marginally more (if you do wait it will be automatically credited to you within 2 weeks of the scheme becoming effective).

Some bids are different - if the market sniffs out a second bidder the shares will trade above the offered price but I don't think that is going to happen here.

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Jimmy Choo takeover - some advice, please!

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Lord Zion

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