dr greg partington, page-5

As you know GGG is listing on the ASX in three weeks or less. CGT rollover relief will be obtained right after and this will become a non-issue.

The response to the bid statement was a bit lackluster, didnt exactly give us any meat as to why AZX should manage the project. I imagine all the technical people doing the project right now will be absorbed into the combined group, seems a bit unrealistic to think that a change of board would result in the whole shop leaving! If that was the case then every takeover would see that and we know that is just not true. If the AZX board think their share is undervalued they should get a new bidder in the market and get the price up.

The assumption on the CGT argument is that every holder in the register owns their stock via a personal holding and looking at the top 20 that is just not true.

GGG 8m 8.42%
baker Steel 7.9m 8.33% (plus probably another 3m in other portfolios)
Peninsula Pty Ltd 7.1% 7.9%
CommBank 4.7m 4.98%
Jervois Mining 2.76m 2.91%

thats 30m shares in the top 6 which are all not individual holders - 31% of the holders. Retail in this is probably 50% of the register and most people use their superfunds or investment companies these days to trade which are not affected by CGT rollover issues. Its an issue to sort out but by no means a dealbreaker.

What the AZX guys have to do here is either counterbid and drive it from their side or get a white knight in to stuff the bid up, if all they really want to do here is to keep the status quo which we all know is keeping the stocks undervalued. Putting them together makes sense from multiple angles, and its only ego keeping a deal from happening which frankly isnt a good enough reason for me.

I can see a couple of funds coming and buying AZX solidly with the express purpose of accepting the GGG bid - today the arb has narrowed due to GGG falling in London to 34p and the A$ weakening. We will see. Perhaps GGG will have to raise its bid to get acceptance from all holders but I am pretty sure they will get a majority from the funds and clients in AZX right now as the brokers know the only reason AZX is staying up here is the bid - lose that and AZX corrects back to 60 and below.