We gave £5.4m (E8m) cash to Dexo. Then turned around to issue 12m shares at 47p which raises £5.7m which effectively just gets our money back. Why not just give Dexo all the share in the first place which would have been at 52p instead of 47p which is a better deal for shareholders, and it's does away with the cut that the broker normally takes too. RT and DF are both smart numbers guys so why do it this way???? Still happy with the outcome but just curious as to the structure of the deals. Any possible explanations?
Inghu,
At a low level, Dexo owners probably demanded a mixture of cash and shares for the deal. Some owners would be reluctant to take all shares as there is higher risk and could be problems with offloading stock in the future. The cash is concrete. The share issue is important for us also in that it locks in Dexo owners/management and gives them an incentive to work within BPRG in the longer term and see the share price increase.
Its a pity a release of shares for financing the takeover has to go through brokers (who will receive a nice chunky commission!).
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