Forge upside capped at $5.60 in a Clough takeover situation?

The Australian Financial Review published an article yesterday about the likelihood of Clough Limited (ASX:CLO) bidding for the rest of Forge Group (ASX:FGE). I guess the market is excited about the possibility and the share price has been sharply up over the last couple of days.

There's a few dates that may be worth keeping an eye on for shareholders:

• 31 Dec 2011: Contracts expire for two founding directors. Will they continue on or part ways?
• 2-6 Jan 2012: Founding directors hold put options to offload 2.5 million of shares/options to Clough with an exercise price of $5.60 which are exercisable between these dates. This is around 3% of the total outstanding stock and the majority of the directors' holdings.
• 23-27 April 2012: A further 0.75 million shares/options can be potentially offloaded - same conditions as above.

What does this all mean?

Directors have the choice of exiting very soon at $5.60/share. 2-6 January is of importance here. If they do decide to sell up, and Clough decide to launch a full takeover quickly thereafter, the offer will unlikely be over $5.60. I can't see shareholders getting a better deal than the founding directors.

Wait and see shall we?

I did end up purchasing some stock since my last post on the company. The winning of $200m FMG's Solomon Hub contract was a biggie and potential $250m+ share of the Roy Hill project adds a lot of excitement.

FGE was up over 5% today to $4.85