Ainsworth's share price fall

The company's share price has fallen by 15% since shareholders approved the Novomatic transaction last week

After all the protests by ASIC and minority shareholders including us at the proposed sale by Len Ainsworth of his 53% shareholding in Ainsworth Game Technology to Novomatic, it was easily approved at last week's EGM. 
 
The company's share price has since declined 15%, suggesting that a significant number of disappointed shareholders are moving on. As we've noted previously, this is a volatile stock due to its low free float so wide price swings are to be expected. 
 
We note that Len Ainsworth participated in the company's DRP earlier this year and these shares weren't included in the Novomatic transaction. As a result, he and his wife still own more than 10% of the company, which potentially acts as a barrier to compulsory acquisition by Novomatic should it subsequently move to full ownership. Of course, Len Ainsworth has already earned $470m pre-tax from the sale so shareholders will have to rely on 'fiercely independent' Margerete Ainsworth to protect their interests if this occurs.
 
It will likely take a year or so for the various regulators to approve the transaction and we'll have a more in-depth article later this month. HOLD
 
Note: The Intelligent Investor Growth Portfolio and Equity Income Portfolio own shares in Ainsworth Game Technology. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.
 
Disclosure: the author owns shares in Ainsworth Game Technology. 
 

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