Wednesday, July 23, 2014

Reef Casino trading well below Aquis offer

There has been some interesting media reports and comments from our local vanguard re the ACCC intervention on Aquis bid for Reef Casino deserving of a further post: Cairns civic leaders join forces to reject Aquis anti-competition claims

Submissions are now closed on that with a decision next month. I would have thought it probably unlikely the ACCC will block the takeover although the risk of that is possible and the ASX market action in Reef (RCT) has appeared less than fully confident in the outcome.

RCT is currently trading down at $3.68 following the ACCC announcement, well below the offer price of $4.354. That would provide a nominal return of 18% should the takeover be consummated. An annualised return calculation on that could be quite impressive depending on time to any successful completion. The offer is open until 31st October although could be extended depending on the probity and licence process.

A simple chart of trading over the past year and three significant events stand out. The initial announcement last November, followed by a formal takeover implementation agreement in February, then the ACCC intervention this month.

As previously mentioned RCT is a thinly traded stock with comparatively low daily trading volumes. Trading activity in RCT during this recent period appears more indicative of a relatively substantial player(s) reducing risk persistently feeding the sell side rather than nervous mums and dads bailing out.

Disclaimer: This is commentary and NOT investment advice. I maintain a small holding in RCT.

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