Big trade after the close. I have no idea whats going on and there is very little info out there. Clearly some big money chasing MCU for reasons yet to be known, beginning to look like a scramble .
And fyi
From the Australian
Aegis's MCU option
AEGIS wanted its foot on a strategic stake in Mitchell Communication Group (MCU) as a poison pill to deter any potential bidders and Harold Mitchell wanted equity to continue his participation, but didn't want to be stuck with a holding in Aegis if, for whatever reason, the $363 million takeover didn't succeed.
The answer was for Aegis to take an option over 19.9 per cent of MCU, part of his 30 per cent shareholding, a mechanism which is not new, but which hasn't been used much in recent times. The details of the option deed became available yesterday.
The option period runs for nine months from the date of the deed (July 29). It is exercisable by Aegis only in the event that a "competing transaction" is announced. Aegis would then have the opportunity of converting its option into an actual stake of 19.9 per cent, thereby denying a rival bidder the ability to secure full ownership.
In the absence of a rival offer, Mitchell's stake would be acquired, along with that of all other shareholders, under the scheme, assuming that it is approved by shareholders and the court. MCU holders can take cash, shares or a mix and Mitchell has indicated he will take shares.
But the deed also offers protection for Mitchell in the event that Aegis exercises its option, the rival bid fails and, for whatever reason, the scheme doesn't succeed, leaving Mitchell with a holding of Aegis shares and 10 per cent of MCU.
Mitchell also has a call option under which he can require Aegis to sell back to him the stake that it acquired by exercising its option. Mitchell's call option is exercisable at the end of Aegis's option period -- that is, in nine months. The deed also contemplates the possibility that Aegis may exercise its option, but the rival bidder then makes an offer which Aegis considers too good to refuse and it accepts for the 19.9 per cent of MCU that it acquires from Mitchell.
In such circumstances, Aegis would be entitled to retain two-thirds of an offer value above $1.20 per MCU share and pay Mitchell the other one-third.
MCU Price at posting:
$1.24 Sentiment: Buy Disclosure: Held
