Ann: Campbell Bros. Intends Making Offer for Ammt, page-6

re: Ann: Campbell Bros. Intends Making Offer ... This is an interesting development, but not unexpected.

CPB have issues with their overseas earnings and its logical buying a local company and what better business to buy than Ammtec, the world market leader in mettalurgy studies.

However, the offer price of $3.35 is laughable and will be unanimously rejected by the board. Watch for AEC to bring out the heavy hitters like Argonaut.

CPB have thrown a line out to this tightly held (mainly retail) shareholder base to see how they react, and if you look today only 270,000 shares have traded and that's .0065% of the register. This is a great indication to the board that shareholders will be waiting for their recommendation.

Ammtec have no debt, own all their equipment and associated properties, flat out busy and are building a new lab that will dwarf the others - using cash. The Marc business is turning around and CPB have not even factored in the value of the PSI technology that management have pursued for 6 years.

On another front:
6 months ago CPB lobbed a bid for Pearlstreet (PST), a WA company that specialises in testing, inspecting, and consulting to the mining industry, at the time PST had some real issues and needed a partner or a fair amount of cash. In their annual report, directors mentioned this. CPB were successful after some negotiation, here's how that evolved.

1st October 2009:
Pearlstreet / CPB
The board of PearlStreet Limited (PearlStreet) has rejected the proposed offer by Campbell Brothers Limited (Campbell Brothers) for all of the shares in PearlStreet at 56 cents per share as not being in the best interests of shareholders.

A week later:
PST management "are speaking to private equity about cash injection at 50 odd cents"

a month later:
CPB
The offer price of 75 cents cash for each PearlStreet Share represents a significant premium for your PearlStreet Shares:
142% premium to the VWAP of PearlStreet Shares of 31 cents for the five day trading period ending on 28th Sept 2009.
134% premium to the VWAP for PearlStreet Shares of 32 cents for the 1 month period ending on 28 Sept 2009.
159% premium to the VWAP for PearlStreet Shares of 29 cents for the 12 month period ending on 28 Sept 2009.

Now CPB had the backing of the (PST) Managing Director (Wooles) with this offer, who was also the biggest shareholder with 50%.

Ammtec's biggest shareholder is Perpetual with 7.5%, two other very longterm shareholders sit on this register (CHO, MLT), who have both been fantastic supporters. They would all be on the phone to Rod Smith telling him what they thought and if its anything to go by with the last AGM, they will want more and a lot more (CHO + MLT have cross managers).

How about the offer of US$25m from another Australian listed company for the PSI technology. Management have been pouring $2m a year into this and they are convinced its worth far more than that original offer.

Watch for the board rejection and watch for CPB and Minter Ellison to come back with a more realistic price.

Retail holders and management own AEC, not the insto's. I wont be selling into this low ball offer.

Pep