NG just got an offer from ABX for $14.5 in cash, but it pops to about $15.50. While I’m very happy to have an immediate return of 33%, I hate this kind of low-ball mergers. Last time, when HMY tries to buy GFI, market reaction was similar. GFI was trading above the offering price by more than 5% to 10% almost the entire time. The merger ended up not happening without any new acquirer or a better offer price, but it took my portfolio down for some wrenching $30K to $40K in the meantime.
Again, the market has spoken this time, and NG is trading at $15.50, significantly higher than $14.50 offer. While I can’t say what will happen this time, and I even venture to guess that there may be a better offer price + a new acquirer, I won’t bet my money on it. Truly had enough last time. I especially dislike the management at HMY who had insisted not withdrawing the offer, and simply waited for stupid people or arbitragers to tender their shares. I hope ABX won’t be this blatant to ignore the market power.
By the way, in this arena, sometimes, it does pay to invest in smaller player like NG.
P.S. I’m in no way recommending buying NG, because assuming that my previous post on a low forming in HUI/Gold is correct, a cash offer is the worse offer that you can get. While the market may be rising, your offer is fixed by the cash price. Eventually, ABX can raise it’s offer to $15.50, and still pay zero or even negative premium given today’s HUI level.
