Potentially I would like to invest in a combined PRG/SKE if it is done well.
I don’t pay too much attention to premiums based on recent market prices but rather look at what I think a business is worth from a long term cash generative position.
I hold SKE shares – I would be happy to exchange them for PRG shares if my stake converts to a 50% ownership of the merged group and anything above 16 cents.
If the deal is for less than 50% new co ownership I would have to reassess the as the potential synergies are quite attractive. The cash component would obviously have to compensate for the reduced ownership.
If (based on 50%) the cash component is much larger then ~ 25 cents then I would also have to consider exiting over taking up a part script offer as that would call into question the competence of the new management I would be hostage too, and probably not present the sort of balance sheet I would want to see.
If SKE position has deteriorated substantially beyond what I would expect for this part of the cycle (I expect pretty bad) then I may also reconsider a lower cash component then 16c.
Pondering the possibilities passes the time but looking forward to seeing some detail now to make some decisions.
