RBD - Restaurant Brands

[Snoopy]

Snoopy - thoughts?

One proposition is that given that Finaccess will achieve control, those shareholders who held out and wish to continue to hold could adopt the position that should accept the offer at $9.45 to realise the control premium on their holdings and then reacquire the original number of shares they had afterwards at the listed price less the control premium from the remaining float.

Some shareholders may find if there is scaling on the extended offer that they end up with small holdings that don’t want (or potentially below the min holding) so may wish to exit these holdings so there may be a bargain or not.

The fact that some people may be left with small holdings that they wish to dispose of has always been the result of this partial takeover bid, once it has become clear that scaling is going to happen.

The market share price closed yesterday at $8.80. That is very close to the $8.89 in my post 2439, which I consider the real value of the bid. There is such a thing as 'minimum brokerage'. So I think there is now a case for those holders in danger of being stuck with a below minimum size holding to sell now on the market, effectively realising their premium from the 'Global Valar' on the market today.

On the eve of the offer closing, I would expect the share price to approach $8.89. Immediately after the offer closes, I would expect the price for the remaining shares to drop back to $7.60 (being the market price the day before Global Valar offer) all things being equal. But of course, all things are not equal, because we are about to learn the result for the FY2019 financial year in April. The sales figures already released look good. I wouldn't be surprised if the intrinsic value of the remaining shares is now greater than $7.60.

In the short term, the share price will be driven by supply and demand. After the offer the free float of RBD will reduce from approximately $1b to $250m. It is likely this will see RBD fall out of the NZX50 (although I could be wrong, it is on the cusp). That could trigger the index funds to sell their residual holdings. My hunch is that immediately after the takeover closes may not be the best time to top up one's holding because of this reason.

I am unclear what the position of the index funds is now. My broker suggested that they will offer up only 75% of their shares into this unconditional offer and retain the remaining 25% until the index issues become clear. I would be interested if anyone can clarify the index funds' positions in a partial takeover like this.

SNOOPY