Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James and Team, When a big company like Mineral Resources pays 0.92c and takes a 14% stake in Delta Lithium when the stock price is around 0.83c . Why does a company pay a higher premium ? Looks to me down the track they will go for the full takeover or block any other bids? Thanks for your reply . Cheers Craig
Hi Craig,
Companies often pay higher prices for large strategic holdings simply because it would be extremely tough/impossible to buy such volume in the actual market without pushing the underlying share price significantly higher e.g. the 14.2% stake MIN bought in DLI represents over 75mn shares yet on Friday less than 1.5mn shares had traded by 2.30pm.
This holding gives MIN some flexibility with future action toward DLI but the fact the stock was trading down at 80c on Friday suggests the market isn’t expecting any imminent corporate action.
We saw a similar thing play out with Magellan this week, where Chris Mackay sold 6.6m shares at a ~3% discount to market to get the line done, implying this was seller driver, while your example was clearly buyer driven.
Take a free trial.
No payment details required.
A link to create a new password will be sent to the email address you have registered to your account.
Hi, this is only available to members. Join today and access the latest views on the latest developments from a professional money manager.
Our Smart Phone App will give you access to much of our content and notifications. Download for free today.
