Way UBS etc been mopping up maybe most smaller shareholders already deserted the ship.
The $1.6 billion in big boys hands ...they may or may not reinvest this in the sector
Printable View
Way UBS etc been mopping up maybe most smaller shareholders already deserted the ship.
The $1.6 billion in big boys hands ...they may or may not reinvest this in the sector
I am not going to try and pretend to be a commercial lawyer but I would have thought "reasonably likely to reduce underlying net profit of the target group in any financial year by 10% or more" could come into this and be their "escape clause".
For example, before last week Westpac economists were predicting a 10% increase in house prices for 2020. They came out just the other day and predicted no net increase now. I will leave others to ponder whether average house prices in Auckland of say $900K being predicted to move up to $990K, but now not, along with possible sales volume reductions might be reasonably likely to reduce MET's underlying profit by 10% or more in FY21.
Possibly a very good short, although I think you would have been far better to stay on the AIR ski slope :p
No it doesn't but the real estate market booming and going up 10% is a very different state of affairs to what might eventuate now and make it much harder to sell per se, and at reasonable prices.
Also people might feel safer staying in their homes while this crisis is in full swing so deferral of discretionary moves to a retirement village is very much on the cards so if they struggle to sell new units and resell ones that are vacant and more that will become vacant with the virus, could a reasonable person draw the conclusion or at the very least make a case that underlying profit could be impacted by 10% or more ?
I like your short with almost no upside risk. Certainly not a legal interpretation though...I'll leave that to the high priced commercial lawyers making $1m+
There's now a very high chance this deal doesn't happen, in my opinion. I think its now very easy to make a strong legal case that a world-wide pandemic is likely to affect FY21 underlying profit by 10% or more. That's their "get out of jail free card" right there. This has major implications for the rest of the sector that bounded up very strongly on initial news of the proposed takeover.
its quite a complicated clause with those parameters specified such as 100M NTA reduction or 10% fall in underlying net profit because all this is specifically excluded if it is a result of
changes in general economic conditions, the publicly traded securities market.
Is it the virus or the change in economic conditions? The contract might allow the virus to be an adverse event but the virus hasn't even hit NZ resthomes yet so that might be a stretch to argue. And you cant blame economic conditions even if they are a result of the virus because they are excluded
But that exclusion then has the possibility of being excluded with a further proviso being ifsuch matter does not have a materially disproportionate effect on the Target GroupGo figure !
Anyway for me the risk is low and the reward is potentially high so I like the odds on being short even though I am not necessarily convinced that the deal will be pulled. it just could be !
I am tempted to play at being an amateur commercial lawyer but I fear it might make my brain hurt :)
All I will say is if there's a will to do something, or stop doing something as the case may be, there's usually some fine print condition somewhere that's been written with sufficient ambiguity that they can squeeze through, the devil as they say, is usually in the detail !
One thing is for sure, you are very safe from a competing superior offer !