Bowing out22 May 2012
Forge Group (ASX:FGE) founding directors exercised their $5.60 put options yesterday - delivering Clough (ASX:CLO) 3.25m additional shares. I had mentioned this upcoming decision previously.
The move effectively reduces the founders' personal holdings to very little and paves the way for their planned exit from the company. Not being privy to internal conversations, it's difficult to work out why the options were exercised more than a month before expiry. My speculative take is Clough has told the founders one of two things:
1. Clough is not intending to make a move on Forge. The directors feeling that the share price will not move above $5.60 in the near term and have decided to take profits.
2. Clough intends to wrap up the rest of Forge with an equivalent offer of $5.60/share or less.
If directors had hung tough holding their stock past expiry, it would have been a very bullish posture - with this result, not so much. Along with the current macro environment for commodities, I've now decided to sit on the sidelines on this one.
FGE last traded at $5.13