CXS - Chemgenex Phamaceuticals

[Miner]

Can someone explain to me why, after an offer is made at 70 cents by Cephalon, the stock is falling away over the last few days.

disclosure: yes I own some CXS

I do not hold CXS.
But your question intrigued to look into the company from ASX
Only couple of days back the company's directors have sold some 44 M shares. So they have started unloading the shares - a deal done.
Once the deal is done, there is little value for others to stick around to be bought.
It is similar to share issued to sophisticated investors and then many a times share price falls

The existing shareholders saw the boom by 54% in a day's time. I would not be worried if I had the holding

DYOR

 

[voigtstr]

I do not hold CXS.
But your question intrigued to look into the company from ASX
Only couple of days back the company's directors have sold some 44 M shares. So they have started unloading the shares - a deal done.
Once the deal is done, there is little value for others to stick around to be bought.
It is similar to share issued to sophisticated investors and then many a times share price falls

The existing shareholders saw the boom by 54% in a day's time. I would not be worried if I had the holding

DYOR

ah ok, cool. Since I have some of these shares I should get paid out at 70 cents per share, would that go straight to commsec or would I get some mail from chemgenex asking me where the funds should go?

 

[McCoy Pauley]

Can someone explain to me why, after an offer is made at 70 cents by Cephalon, the stock is falling away over the last few days.

disclosure: yes I own some CXS

Cephalon received an unsolicited takeover offer shortly after the takeover offer for CXS was announced. It's seen by the expert commentators that CXS would not be an essential part of the predator's business and so the takeover of CXS might not proceed after all.

 

[voigtstr]

Cephalon received an unsolicited takeover offer shortly after the takeover offer for CXS was announced. It's seen by the expert commentators that CXS would not be an essential part of the predator's business and so the takeover of CXS might not proceed after all.

"MELBOURNE, Australia, and MENLO PARK, California U.S.A. (30 March 2011). ChemGenex Pharmaceuticals Limited (ASX: CXS) (ChemGenex) has today become aware that Valeant Pharmaceuticals International, Inc. (Valeant) has proposed a takeover offer in respect of Cephalon, Inc.

Cephalon, Inc., through its wholly owned subsidiary Cephalon CXS Holdings Pty Ltd (Cephalon), announced a takeover offer in respect of all of the issued capital of ChemGenex on 29 March 2011.
Under section 631 of the Corporations Act 2001 (Cth), Cephalon is obliged to make offers to ChemGenex shareholders within 2 months.

There is nothing in the bid conditions announced on 29 March 2011 which allows Cephalon to terminate its offer because of a change of control in respect of Cephalon, Inc.

ChemGenex will update the market where it becomes aware of any matters which may have a material impact on Cephalon’s takeover offer in respect of ChemGenex."

Don't they still have to pay us 70 cents a share?

 

[skc]

Can someone enlighten me on this...

CXS has a takeover offer of 70c that is under a cloud so the shares are trading at 60c - fair enough.

CXSOA are the options with exercise price of 68c, expiry 8 Feb 2012. The offer for these options from what I understand is 2c.

So why on earth would CXSOA closes today at 14c? By the look of the course of sale one bloke spent $80K or so buying it up from 7.5c.

Shouldn't they trade at 1.5c or something like that? Or have I missed something completely

 

[skc]

Can someone enlighten me on this...

CXS has a takeover offer of 70c that is under a cloud so the shares are trading at 60c - fair enough.

CXSOA are the options with exercise price of 68c, expiry 8 Feb 2012. The offer for these options from what I understand is 2c.

So why on earth would CXSOA closes today at 14c? By the look of the course of sale one bloke spent $80K or so buying it up from 7.5c.

Shouldn't they trade at 1.5c or something like that? Or have I missed something completely

And someone keeps buying CXSOA. Now 35c

I can think of 3 possible reasons...

1. The buyer read the takeover offer wrong, or had no idea what options are and how they work, and thought the takeover offer was 70c for the option.

2. The buyer had a huge position in the underlying CXS and buy pulling the CXSOA price up it creates some illusion that someone knows something about the takeover deal.

3. The buyer is crazy.

I will say 3) seemed most likely.

 

[suhm]

4. The buyer and seller may be related parties cycling money to create a cap gain in an untaxed environment i.e. a pension phase smsf and a capital loss in a taxed entity i.e. an individual. high risk strategy though

 

[skc]

4. The buyer and seller may be related parties cycling money to create a cap gain in an untaxed environment i.e. a pension phase smsf and a capital loss in a taxed entity i.e. an individual. high risk strategy though

How?

 

[Country Lad]

1. The buyer read the takeover offer wrong, or had no idea what options are and how they work, and thought the takeover offer was 70c for the option.

Unlikely as all the buying has been by Bell Potter and they would be advising their client if this were the case.

2. The buyer had a huge position in the underlying CXS and buy pulling the CXSOA price up it creates some illusion that someone knows something about the takeover deal.

Rather an expensive way not to make a point. The buyer has acquired over a million at a cost of over $135,000.

3. The buyer is crazy.

See 1 above

4. The buyer and seller may be related parties cycling money to create a cap gain in an untaxed environment i.e. a pension phase smsf and a capital loss in a taxed entity i.e. an individual. high risk strategy though

That was the first thing I thought of, but then he would want to buy only his own options and there have been 9 different brokers on the sell side and no crosses. In fact Bell Potter has not been on both sides of the trade at all.

Cheers
CL

 

[skc]

Unlikely as all the buying has been by Bell Potter and they would be advising their client if this were the case.

When you say Bell Potter is that the broker buying on their own account? Or could be someone who has a discount Bell Potter trading account?

Rather an expensive way not to make a point. The buyer has acquired over a million at a cost of over $135,000.

I suppose the CXS underlying has gone from 60c to ~66c so to off set $135K outlay the option buyer needed to have got ~2.25m shares to breakeven. That kind of volume isn't ridiculus, but the notion that someone would do that is.

See 1 above

Still the most 'logical' answer, unless 1 being true.

That was the first thing I thought of, but then he would want to buy only his own options and there have been 9 different brokers on the sell side and no crosses. In fact Bell Potter has not been on both sides of the trade at all.

They were on-market buys from what I can see. And surely the tax office can't let you transfer holdings like that at 15x what the market value should be?!

5. Someone wants to build a position to influence the takeover outcome but they are not allowed to buy the underlying for whatever reason.

Such a mystery...


P.S. BTW where do you get the broker information from?

 

[skyQuake]

After T+3 you can sell which broker was doing the buying and selling - im seeing it thru desktop iress.

I think the oppie buying was to build a stake large enough to defeat a condition in the takeover. A cheap way to block the t/o

 

[Country Lad]

When you say Bell Potter is that the broker buying on their own account? Or could be someone who has a discount Bell Potter trading account?

It is Bell Potter, not Bell Direct. I would assume it is on behalf of a client who could be anybody, including the bidder.

5. Someone wants to build a position to influence the takeover outcome but they are not allowed to buy the underlying for whatever reason.

Hardly an influence. I assume the option holders will not have a vote and would need to exercise the options to be able to do so. The directors are recommending acceptance so Cephalon will already have 62% interest in the shares and 80% of the options.

Cheers
CL

 

[skc]

Some speculations in the media.

ChemGenex (CXS) 65.5c

WOULD you pay 35c for scrip almost guaranteed to be worth only 2c in a few weeks? Well, someone is willing to do just that, snapping up listed options in the leukemia drug developer ahead of an expected friendly takeover by US group Cephalon.

The odd thing is that Cephalon is offering a mere 2c for the options, which are otherwise worthless, given they're exercisable at 68c before February 2012 expiry.

Theory one is that someone is trying to thwart the offer, conditional on 90 per cent take-up of shares and options.

However, as Cephalon notes in this week's bidder's statement, the company "has no intention of waiving the 90 per cent minimum acceptance condition, but has every right to do so".

Theory two is that Cephalon -- which claims already to have its paws on more than 80 per cent of the options -- is buying up to ensure it passes 90 per cent and can clean up the register.

If it's someone else doing the buying, they're not the smartest guys in the room unless they have a very cunning plan.

Meanwhile, the smart dudes have been piling into the ordinary shares, which have traded at a discount of up to 9c (12.8 per cent) to the 70c-a-share offer.

It was feared that Valeant Pharmaceuticals -- which launched a bid for Cephalon -- would spoil the party for ChemGenex, but the cheque should be in the hands of ChemGenex holders within two months. Hold.

http://www.theaustralian.com.au/bus...ore-war-heats-up/story-e6frg9lo-1226042428831