The controversial deals for Lundin Mining and TMX Group Inc. may be getting all the attention when it comes to mergers that may face trouble, but a review of trading in other outstanding takeover deals shows there are a number of transactions that the market is deeming unlikely.
At one end of the spectrum, shares of targets like Genesis Land Development Corp. and UNX Energy are trading at wide discounts to the acquisition prices put out there by would-be buyers, signalling risk the deals won't get done.
At the other end, Medoro Resources is trading at a big premium -- indicating that investors expect it will take a higher bid to get a transaction done.
Genesis is trading at a full 20 per cent discount to the $5.80-a-share bid from Jupiter Acquisition Ltd., which was made public on April 11. It might have something to do with Jupiter's statement that the transaction is contingent on the buyer's ability to secure financing, as well as a due diligence review.
UNX Energy shares went into this week's trading 9 per cent below the $8.89-a-share value of a bid from HRT Participacoes em Petroleo SA, a Brazilian startup oil company. But while the spread signalled bad things a few weeks ago, it's now looking much more positive for this deal. The spread has been moving in the right direction fast. It was much wider a month ago, but as the companies have worked through the proposal and met investors, the skepticism has declined. And after UNX said Monday that two shareholder advisory firms recommended that investors support the transaction, the gap shrank again to 6.7 per cent.
Medoro shares, on the other hand, entered the week trading 18 per cent over the value of a takeover offer made last week by Gran Columbia Gold , signalling there's a strong belief it will take more to win Medoro.
(All the numbers in this post come from Bloomberg.)