JSE Advice - Gold One

Ok, this is interesting.

First of all, thanks for everyones advice and opinions.

I have just gotten off the line with FNB regarding this.

Apparently it is not a "Hostile Takeover", merely just a consortium that wishes to purchase shares and leave the company as is.

They are offering a slightly inflated price for the shares.

It is still my individual decisions regarding my shares. there will not be a voting process to decide for the masses. But you can tender your individual shares to this consortium and they will purchase for ZAR4.08 per share that is tendered.

If you wish to keep your shares and not sell them, you dont have to.

So, i think i am going to buy some more. :)
 
Wayne_Potgieter said:
Ok, this is interesting.

First of all, thanks for everyones advice and opinions.

I have just gotten off the line with FNB regarding this.

Apparently it is not a "Hostile Takeover", merely just a consortium that wishes to purchase shares and leave the company as is.

They are offering a slightly inflated price for the shares.

It is still my individual decisions regarding my shares. there will not be a voting process to decide for the masses. But you can tender your individual shares to this consortium and they will purchase for ZAR4.08 per share that is tendered.

If you wish to keep your shares and not sell them, you dont have to.

So, i think i am going to buy some more. :)
Click to expand...

So they just take over control and leave the business unchanged, probably just a management buy-in.

Your day starts off with good news, that's always nice.
 
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Anony-mousse said:
If the company is bought out there is nothing he can hold on to. He can either accept the new shares or the cash that is offered.

Any minority can be forced to be bought out, that's called a hostile buy out:

http://en.wikipedia.org/wiki/Takeover#Hostile_takeovers

http://sawaal.ibibo.com/law/majority-shareholder-force-buy-out-minority-shareholder-623220.html

In the end it will all come down to whether the sale goes through or not. Until then I will stay strong.
Click to expand...

Wrong on most counts. The closest you can come to being forced to sell your shares in a publicly traded company is if the company is liquidated or delisted.

Companies are legal entities and do not simply cease to exist just because another company purchase a controlling or even a majority interest - in your earlier post where you had options A through D, only A and C are valid options; either he will refuse and remain a shareholder until he sells his shares (or the company is liquidated or delists), or he can accept the offer and take the cash. (B only applies to share swaps, and D only applies to delisting or liquidations in which case he has no choice)
 
Icarium said:
Wrong on most counts. The closest you can come to being forced to sell your shares in a publicly traded company is if the company is liquidated or delisted.

Companies are legal entities and do not simply cease to exist just because another company purchase a controlling or even a majority interest - in your earlier post where you had options A through D, only A and C are valid options; either he will refuse and remain a shareholder until he sells his shares (or the company is liquidated or delists), or he can accept the offer and take the cash. (B only applies to share swaps, and D only applies to delisting or liquidations in which case he has no choice)
Click to expand...

Ok, I am still not with you.

So what would happen if all shareholders but 1, in this case the OP, would vote for a sale of the company? Can he still sit on it and refuse to take cash or new shares?

What is your definition of controlling stake?

This doesn't have anything to do with the OP's question since it is a different situation. I am just trying to understand your point of having the option to refuse.
 
Anony-mousse said:
Any minority can be forced to be bought out, that's called a hostile buy out:

http://en.wikipedia.org/wiki/Takeover#Hostile_takeovers
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Eh no. Hostile take-over means simply that someone is attempting to buy shares directly from the shareholders without management's blessing. It has nothing to do with forcing someone to sell shares.

Doesn't matter either way though because this is _not_ a hostile takeover. Well not yet anyway....it can always turn hostile.

Anony-mousse said:
http://sawaal.ibibo.com/law/majority-shareholder-force-buy-out-minority-shareholder-623220.html

In the end it will all come down to whether the sale goes through or not. Until then I will stay strong.
Click to expand...
You've got things so back-to-front its not even funny. That link above you've found on google....its UK law and the UK Companies Act.

Anony-mousse said:
probably just a management buy-in.
Click to expand...
:confused: Perhaps you mean Management Buy-out. And no its not that either...
 
I'm only slowly getting used to the fact that in SA is everything different, so who am I to talk.

Just for the record though: http://en.wikipedia.org/wiki/Management_buy-in

Perhaps I should just buy 1 share of some of the biggest companies and totally mess around with their management decisions ;)

But maybe you can answer the question I asked above, cash or new shares if company is sold, since you know so much about buy-ins and buy-outs which should certainly not to be confused.
 
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Maybe I should rephrase my statement to make something clear:

The OP is not forced per se to sell his shares if the company stays unchanged and is only taken over by a new entity and continues to trade as usual.

If the company is bought and goes over to a new company, also the shares will be exchanged for new ones or purchased from the shareholder, whichever way he prefers. He does of course have the right to choose but he cannot keep the existing shares because they are virtually gone already. Nothing has to change for him if he wants to simply exchange the, for new ones.

In this particular instance, the Chinese investors are only aiming to purchase the majority of Gold One and keep everything unchanged, so there isn't even a sale or takeover going on.

That's why I don't understand the arguments. I never said he will be forced to sell if there is no reason to sell.
 
I think you are confusing the meaning and mechanics of corporate action. If a company is interested in buying another it could either buy the assets/operations from the target company, in which case the target company's shareholders have to vote 75% plus to approve (when majority of assets are sold). The target company will then sit with the cash/share proceeds, which will typically be distributed to the shareholders as a dividend. This is not the norm as it is complicated and expensive - tax, legal and otherwise.

Alternatively they can make an offer to the existing shareholders to buy out their shares and thus secure control. The purchase price can be settled with either cash or shares or a combination. This is effectively an offer to each and every individual shareholder. Each shareholder can decide whether he wants to sell or not. Should enough agree to secure control the purchaser now "owns" the company in the sense that with majority shares they can control voting, the board of directors, management etc.

When a company offers to buy shares, as in GoldOne's case, typically the current board of directors will advise their shareholders on the proposed purchase e.g. their opinion of the value offered per share, strategy etc. etc. etc. This however is only a recommendation and every shareholder can still proceed as he wishes.

Should a shareholder decide not to sell, but the purchaser still manages to acquire a majority stake in the company then nothing changes directly for the existing shareholder, other than having a new major shareholder with enough voting power to enforce whatever direction they want to take the company in. This may, or may not, make an difference to the existing shareholder. In a friendly takeover the bulk of current management typically remains, whereas with a hostile takeover (i.e. not recommended by the board) there are usualy large scale management changes, especially at the top. The shareholder still holds the same share in EXACTLY the same company.

Forcing anybody to sell a share is completely contrary to free market capitalist principles - and remember that in practice you only need 50-60% of shares to have almost complete control.
 
Anony-mousse said:
So what would happen if all shareholders but 1, in this case the OP, would vote for a sale of the company? Can he still sit on it and refuse to take cash or new shares?
Click to expand...

The company isn't being sold. The Chinese company wants a controlling stake (50%+), so it's made an offer to buy out the shares of the major shareholder. Because of the size of the proposed purchase, they are forced to make the offer to -all- shareholders to prevent prejeducing minority shareholders. The meeting and vote is for the current shareholders to decide whether the proposal is acceptable - if it is, the Chinese company will have to offer to purchase -all- shares at the agreed on price, with the understanding that the majority shareholder -will- sell thier shares. Wayne can then accept the offer and sell his shares to the Chinese company at the same price as the majority shareholder, or keep them and remain a shareholder in the company, no different to what he is now.

Basically there is no difference between this Chinese company buying shares in GoldOne and me buying shares in GoldOne, with the exception that the Chinese company will be able to call the shots on the business side as the controlling shareholder.

SiriS does a much better job of explaining this than I can.
 
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