Monday, 15 December 2008

Decision time for Gladstone shareholders

It’s decision time for Gladstone shareholders. Constellation has announced a final, extension (to 30 December) for its bid for Gladstone and has made it clear that the 25p offer is final and will not be increased unless a competitive situation arises.

Acceptances – at 11.5 % - have not grown dramatically, and with Constellation’s own 29.9% holding, amount to just over 41% - so it seems likely that their offer will not succeed at its current level. Given the time of year, I would be surprised by anyone else entering the bidding now, so it looks as if shareholders have to accept either 25p now, or face the share price dropping back – to, say, 18p – after the bid lapses.

It will be interesting to see what Constellation does with its 29.9% shareholding if their bid lapses – my guess is that it will retain it, wait 6 months to see how the current Gladstone Board manages the business in a declining market, and possibly bid again if the Board does badly.

Yes – they might be persuaded to part with the holding for a short-term profit (and most probably an immediate bid from the purchaser), but my guess is that they’re in this for the long-term.

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