Just a few things.The offer period begins on 1st June.Prior to...

Just a few things.

The offer period begins on 1st June.

Prior to then, AWE can buy at the offer price in the market. Under UK rules, it would not be permitted to buy at a higher price and I would suppose that ASX has a similar rule. Paragraph 5.7 appears to confirm this. So, whilst the shares are being bought at a price above 40 cents, AWE is not adding to its holding.

In paragraph 6.4(a) of the offer document, AWE spells out its thoughts (it does not state intentions) on what it might do in the case that it obtains control but insufficient shares to compulsorily buy the outstanding shares (90%). If it means to cancel the listing as soon as it obtains control, it does not read that way. It seems to read that a decision will be made following the close of the offer period.

So, I don't think that there is any reason to act before ADI has had a chance to respond. To panic shareholders into selling before the target's response by threatening to use control to enable the predator to de-list the shares would be despicable and most probably would not be permitted.

As to the reasons to sell on page 5 of the document: AWE makes it sound as if it is providing shareholders with a bail-out.

The timing of this offer appears to confirm that the company could be in for a significant re-rating in H2 2010 if the drilling programme on S/L is continued or even ramped up.

My concern is that ADI will or may have difficulty in spelling out the full potential of the company. That might not stop Hartleys from forming a more robust view on a revised price target, however.

Whilst the shares are trading above 40 cents, there's no risk of AWE gaining control. That's how I read the situation.