Constellation has issued what I suspect will be its last letter to shareholders about its current bid for Gladstone. The letter makes it clear that the 25p offer is final and will not be increased unless a competitive situation arises.
The letter makes no new points, but re-emphasises the existing arguments. Quoting from the RNS:
“the Gladstone Board has failed to provide Gladstone shareholders with any quantitative assessment of what the future might hold. In particular the Gladstone Board has:
· made NO forecast for profits in the future
· given NO quantitative assessment of the future trading potential that will result from its 'significant investment programme'
· given NO quantitative support to its statement that 'Gladstone has excellent growth prospects'
· given NO specific timing for the commencement of dividend payments
· produced NO details about any possible alternative offer for Gladstone”
Again, no one can dispute their points. But likewise, I don’t think anyone can dispute Gladstone’s Board’s view that the bid is “opportunistic and wholly inadequate”.
As noted in my previous posts, with acceptances – at 11.5 % above Constellation’s current 29.9% shareholding - it seems likely that their offer will not succeed at its current level.
My expectation is that the current bid will lapse, the share price will drop back to c 18p, but that later in 2009 there will be another bid, either from Constellation, or another company that has been able to acquire Constellations 29.9% shareholding (always assuming that Constellation is willing to sell it). If Gladstone’s Board get their act together, this could be for significantly more that 25p – or if not, Constellation may get Gladstone at even less than the 25p currently bid.
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