Buying Bendigo shares

[bonkerrs]

A few people I've been talking to about shares recently have mentioned about buying Bendigo shares - in hope for a take over from one of the larger banks. So like a dufus, I've nodded my head and agreed... not having any real clue as to why that would be a good thing!!

So here I will ask 'why' in case I get asked is it a good idea. In simple layman's terms... why would it be good to hold Ben shares if/when there is a take over by one of the larger banks?

thanks in advance!

 

[nomore4s]

Normally a takeover will be at a premium to the current share price, so when the takeover bid becomes public the share price jumps to match the offer because this is now what the sp is "valued" at.

But buying a share in the hope of a takeover offer is buying the share for the wrong reasons imo.

 

[bonkerrs]

Normally a takeover will be at a premium to the current share price, so when the takeover bid becomes public the share price jumps to match the offer because this is now what the sp is "valued" at.

100 BEN shares at $6.50 and CBA takes over Bendigo... can someone play out this example please! What will happen to the 100 BEN shares?

 

[Julia]

Bonkerrs, read nomore4s's post. He has given you the outline of what usually happens.

 

[bonkerrs]

Bonkerrs, read nomore4s's post. He has given you the outline of what usually happens.

The problem is - I did read it (and re-read it several times)... and to be honest I can't understand how it would affect those with BEN shares. That's why I asked again (with an example).

 

[CanOz]

The problem is - I did read it (and re-read it several times)... and to be honest I can't understand how it would affect those with BEN shares. That's why I asked again (with an example).

Ok, i am a banker with CBA, and i value BEN at 8.14....we announce a takeover bid at that price. How much are your shares worth now?

CanOz
(This is not real)

 

[nomore4s]

Bonkerrs that will depend on the type of takeover, but with CBA taking over BEN, CBA will probably offer a certain price say $7.50 - so your 100 shares are now valued at $750. CBA will then convert that $750 into CBA shares, so if CBA is say $30 you will end up with 25 CBA shares.

Hope that helps

 

[skc]

It depends on what price CBA is willing to pay. Typically the price is higher than the last trade price. CBA may offer cash, or they may use their own shares. For example, they may decide 3 CBA shares for each of 10 Bendigo, effectively putting a price on BEN at 3*31.5/10 = $9.45 (assuming current CBA price = $31.5).


P.S. The numbers are pulled from you-don't-want-to-know-where. No one knows what price CBA is willing to pay for BEN, except may be Ralph. Try ralph.norris@cba.com.au

P.S. If you do get in contact with Ralph, can you please also ask him what price he is paying for SUN? Thanks

 

[nomore4s]

lol @ skc.

Also ask Ralph to increase the d/e next half

 

[beamstas]

Generally when a takeover bid is placed it is worth more than the value of the share.

So if bendigo was trading at $10.00 (i know nothing about bendigo or even the price), and someone wanted to take them over, they might offer $11 per share. Lets say the company taking them over is Beamstas Bank . The shares of beamstas bank are trading at $11.00.

Therefore you will get 1 beamstas bank share per 1 bendigo share, even though your bendigo shares were only "worth" $10.00 they are now worth $11.00 each being beamstas bank shares. So during the takeover you have made $1 per share (theoretically)

I hope this is simple enough to understand

I am not advising you to buy shares in any company, and im my opinion buying in hope of a takeover is a pretty bad idea. For example buying RIO back when BHP had the takeover bid would of had disasterous affects

Do your own research

Thanks
Brad

 

[bonkerrs]

Thanks everyone!