Two's comfortable but three's a crowd

By Intelligent Investor · 5 Jun 1998

By Intelligent Investor ·
5 Jun 1998

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Pilbara Minerals Limited - PLS

Current price

$3.83 at 16:40 (19 April 2024)

Price at review

$4.47 at (05 June 1998)

All Prices are in AUD ($)

As mentioned in our April 6 issue, National Foods isn't the only company that has given Pauls the once over. NFD now has a very serious fight on its hands with Parmalat, the Italian contender. Having made a cash offer of $4.30 per share, 11.7% over NFD's current offer of $3.85, we shall now see how resolute National Foods are in their view that its current bid for Pauls is fair and fully priced.

Money not the only consideration

In contrast, Pauls directors have advised of their intention to recommend shareholders accept the Parmalat offer in the absence of a higher bid. National Foods now has a lot more than just a higher price to consider when deciding whether to leapfrog Parmalat's offer.

Firstly, Pauls Queensland dominance must be a major attraction for both NFD and Parmalat. Secondly, Pauls would give Parmalat a running start from which to begin chipping away at NFD's market position.

By conceding the fight, National Foods are opening the door to a formidable competitor - Parmalat has indicated that it plans to use Pauls as its Asia-Pacific HQ and as a springboard into other Australian markets.

For Paul's shareholders, as with any takeover situation, it's pointless accepting any offer until just prior to its close to ensure yourself of the highest possible price. HOLD.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

Two's comfortable but three's a crowd

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