MET - Metlifecare - one for the fundies?

[NOCASH]

Just look at the last sure sure deal ... they all are only sure until one of the party decides to change their mind or until the circumstances change. Did happen in the past, but for sure won't happen again ?

Hint ... 4 months is a looong time in an exponentially growing Covid pandemic. NZ might have a second wave. Sweden will have an amazing second wave. People might run out of money or see better opportunities. Rules and regulations might change.

The chances of not going through is slim? Would you say 80% chance it will go through or is it a flip of a coin 50/50 Heads or Tail?

[BlackPeter]

The chances of not going through is slim? Would you say 80% chance it will go through or is it a flip of a coin 50/50 Heads or Tail?

Who knows (given the uncertainty around the pandemic) and what relevance would any assumption have given that one set of data points is not statistically relevant?

Either the deal goes through or it does not, but it clearly is not a sure deal until the cheque is in the bank ...

Why don't you ask the market? The current discount clearly shows that the market thinks a deal is more likely than no deal, but the likelyhood is not 100%. I do agree with that assessment :

[Beagle]

Current share price is suggesting the deal is an absolute certainity and the 9-10 cent share price difference is merely time value of money for the approx 4 months until you get the $6.

Thing is, its not certain. Its somethign shareholders have to vote on which could go either way and something the overseas investment office and high court have to decide on. Also is there an escape clause in there somewhere in that 70 plus pages of the detail of the new scheme in the fine print that lets them escape if they decide to walk away such as in the case of widespread Covid spread in the community sometime in the next 4 months ? What have the parties agreed as compensation if APVG walk away ? From a quick skim read of the documments it looks like not very much

If there was just a 10% chance the scheme would fail, (not hard to make the case its more than that given there are 3-4 possible things that could trip it up), and one assumes the price retreats to $4 if this happens then a 10% chance of a potential $1.90 decline (19 cents) would not appear to be priced correctly by the market. 10 cents difference for time value of money and 19 cents difference for the possibility of a negative outcome would suggest a fair current share price is $5.71 not $5.90 which is why I sold at the latter figure. I for one would be rolling on the floor with laughter if I had a third opportunity to ride this fun rollercoaster

[Onion]

Current share price is suggesting the deal is an absolute certainity and the 9-10 cent share price difference is merely time value of money for the approx 4 months until you get the $6.

Thing is, its not certain. Its somethign shareholders have to vote on which could go either way and something the overseas investment office and high court have to decide on. Also is there an escape clause in there somewhere in that 70 plus pages of the detail of the new scheme in the fine print that lets them escape if they decide to walk away such as in the case of widespread Covid spread in the community sometime in the next 4 months ? What have the parties agreed as compensation if APVG walk away ? From a quick skim read of the documments it looks like not very much

If there was just a 10% chance the scheme would fail, (not hard to make the case its more than that given there are 3-4 possible things that could trip it up), and one assumes the price retreats to $4 if this happens then a 10% chance of a potential $1.90 decline (19 cents) would not appear to be priced correctly by the market. 10 cents difference for time value of money and 19 cents difference for the possibility of a negative outcome would suggest a fair current share price is $5.71 not $5.90 which is why I sold at the latter figure. I for one would be rolling on the floor with laughter if I had a third opportunity to ride this fun rollercoaster

Persuasively put Beagle.

So I dropped my ask price and am now out (again).

[bullfrog]

You do make a persuasive argument Beagle however, the first deal was struck before Covid, this deal takes into account Covid, and a second/third wave. I'm pretty sure that APVG have done their homework wrt Covid effects and that makes this a vote of confidence in the NZ property market. I reckon at $5.9, punters are betting that there's a fair chance we may see it rejected. I'm thinking $6.35.

EQT backed out of the $7 deal on the assumption that Metlife's value would reduce by $100m, and it's profits by at least 10% in 2020/21. There was also some guff about lack of communication... Has this happened?


It's not cheap to put together a bid like this, and NZ has proven that if there's one place in the world that can handle the virus, it's us. Shareholders should be thinking there's a little more juice left in this lemon.

[Beagle]

Baa Baa made a good point yesterday that I should move on and leave this alone but for the benifet of trying to help others understand the risks I will opine once more.

Fair enough bullfrog but people should read the full agreement. http://nzx-prod-s7fsd7f98s.s3-websit...098/326226.pdf
I'd be concerned by things like clauses 14.1(a), 14 1(b) and 14.1 (c) which enable the bidder to withdraw.
When you dig into it all they would have to allege is breech of good faith with disclosure materials under due diligence and the legal games would be on again.
Break fee and reverse break fee, (both $12.8m) is agreed by both parties to be the total limit of their ability to claim from each other under some prescribed circumstances.

What is the bet that APVG has only had guaranteed letters of credit from EQT to fund just this amount and any attempt to sue EQT for breeches outside of the scope of those that the parties agree is limited to the break fee, (i.e. a non prescribed event breech) i.e. sue for specific performance or more than $12.8m would involve attempted enforcement in a European court.

What we do know for certain is EQT is a highly experienced and extremely wily customer who has walked all over the very inexperienced directors of MET.
Heaven forbid what has happened with an explosion in Corora virus in Melbourne with over 400 cases today happens here https://www.nzherald.co.nz/world/new...ectid=12348875 but if it did I would bet my last dollar APVG and EQT would find some excuse to walk away. Plenty of small holes in the fine print for a weasel to jump through if they really want too. If they did walk away there would be no point spending tens of millions on a multi year legal goose chase chasing such a pathetic deal and MET directors would just roll over and play nice and might even invite them back for a third deal at $5

I doubt you'll get a fair price which should be at least $6.50 in my opinion as the directors, the super fund and the valuers (by concentrating on just the last 3 years of very modest growth) have ostensibly sold shareholders down the river.

[see weed]

Thanks Beagle, for all your input and info. Sold half my holding yesterday at good profit and was never a long term holder anyway. There is lots of other stocks to chase and make money on. The way I see it, I would probably make the same profit or more somewhere else than wait 3 or 4 months for MET to go up to $6 or $6.50. Will sell the other half next week, and am happy with the 1.65 profit made so far.

[whome]

See weed, would you be deploying those funds into a milky company with a 2 in it!

[peat]

Was mulling over shorting this again over the weekend.
As before the risk of the price moving upwards is relatively minimal. If no one else gets involved the loss would be 10c / share.
The possibility of the price moving downwards is really there and if the bid failed for any reason price could easily drop $1 or more.
Thems not bad odds.

[see weed]

See weed, would you be deploying those funds into a milky company with a 2 in it!

Not at the moment. Buying into CEN last couple of weeks, hoping for a big div strip.