The takeover offer is recommended by the board. The offer price is $1.27. Currently it is trading 1.23/24
The last price of CUS AU is $0.92 before the announcement of the deal. At the current offered price for CUS AU ($1.24), there is 2.42% premium in the deal which translates to 8.49% IRR if you take a completion date of 15 July 2012.
The offer is done via a scheme of implementation meaning shareholders have to approve the deal by voting. Required 75% votes from 50% of shareholders to approve the deal.
The deal is still conditional upon Customers shareholder approval, regulatory approval (not much risk here), independent expert report, and lastly but not least FINANCING. DirectCash has 25 days to get a committed term sheet to fund this deal.
It seems to be trading at a tight spread given financing is yet to be secured for this deal.
The concern for me is that this deal is roughly worth around US $130 million and DirectCash is just CAD$400 million. Wonder if financing will be an issue here. (Do a check on the debt ratio and current ratio)
With that said , downside risk is roughly 26%. I would probably get some if the price goes to a more attractive level to price in the financing risk.
Possibly entry price $1.22 or $1.23
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