An extra six month of thinking time08 January 2012
Since we last spoke on Forge Group (ASX:FGE), both the employment contracts for two of the founding directors and the final date to exercise the $5.60 put options have been pushed out to 31st July and 30th June respectively. This gives Clough (ASX:CLO) effectively six more months to decide on what appears to be an imminent takeover.
Again it's important to keep an eye out on what the directors do with the put options. Should they exercise early then it's a signal that a takeover offer of over $5.60 is unlikely.
At this stage, my take is that the offer will eventuate before June 30 and will likely be above $5.60. Especially with comments such as these from the current managing director:
The management team has confidence in where the company's going and that the share price could be significantly higher than the put price in due course.
Peter Hutchinson has reason to be confident, as there seems to be a near term catalyst in the works. The last ASX announcement stated that the company is "currently in negotiations to make a significant acquisition of a new business" with negotiations "at an advanced stage". Forge currently holds $70m+ in cash and have no gearing. All the required ingredients are present for a high impact acquisition for this $400m market cap company.
FGE last traded at: $4.92