dd,
In answer to your question, I offer the following calculations of ARP to HM value assuming:
- no discount for uncertainty,
- no premium for potential competing bids,
- no premium or discount for major news or other unforeseen contingencies occuring prior to the meeting of shareholders,
- a currency exchange rate of US$1 = CDN$1.51,
- the pooling ratio of 1 ARP = .545 HM, and
- all other things being equal.
HM at US$9.00 = ARP at CDN$7.41
HM at US$8.75 = ARP at CDN$7.20
HM at US$8.50 = ARP at CDN$7.00
HM at US$8.25 = ARP at CDN$6.79
HM at US$8.00 = ARP at CDN$6.58
The price of gold is not considered to be a factor in the foregoing as HM is presumed to trade in relation to it. That is an over-simplification since ideally one would also need to consider the relative profitability of ARP production at varying gold prices.
Perhaps because of market reaction, perhaps because of the price of gold, perhaps for other reasons, HM has not traded above US$9.00 since the offer. Whatever the reason, it would need to trade at US$9.48 for ARP to reach CDN$7.80 on the above assumptions.
Given HM's share performance since the date of the offer, ABX may be encouraged to could mount a competing bid - for Canadians even CDN$7.50 might be attractive - but success would be dependent upon, as of or about the date of tender, in the case of a cash offer, the currency exchange rates and the price of HM, and, in the case of a comparable pooling of interests, the relative strength of ABX versus HM in terms of price, which might be confounded to some degree by the currency exchange rates as well.
While all is fair in love and war, I will not hold my breath waiting for ABX to make a competing bid. I suspect there is at least one bruised ego at ABX from the prior unsuccessful takeover bid and, possibly fairly or unfairly, some animosity towards the principals of ARP for hard dealing during the prior bid. On the other hand, ABX might enjoy nothing better than to unceremoniously dispense with the services of the current board and senior management of ARP.
Time and the ticker tape will tell.
Regards,
Tony |
