Here’s how you can profit from a takeover of Ten Network Holdings Limited

Here's how you can profit from a takeover of Ten Network Holdings Limited

Don't bet on a quick profit from Ten Network Holdings Limited (ASX:TEN).

Andrew Mudie

Andrew joined the growing team of Motley Fool freelance writers in mid-2013 following years of personal development as a passionate self-taught sharemarket investor. At the time, Andrew was an engineer by trade, writer by hobby, and an investing nerd by passion who spent far too many breaks reading, writing and learning. Andrew’s first investing lesson came with his first stock selection in 2011 when takeover rumours caused a spike and subsequent plunge in the share price of Woodside and then the 21% fall in the market through mid-2011. The next four years of investing saw Andrew dabble in a vast array of strategies until settling on his favourite investment methodology, which is closely aligned with that of the Motley Fool: Fundamentals-based long-term buy-and-hold of great companies at great prices.

Published January 27, 2015 9:52 am AEDT

Ten Network Holdings Limited (ASX: TEN) is going to be bought sooner or later. US media and private equity groups Discovery, Anchorage Capital, and Haim Saban's Saban Capital are eyeing Australia's third-largest broadcaster with the support of rival Foxtel.

Ten's share price is currently floating around the 20 cent mark following media reports that Discovery and Foxtel were preparing a joint bid valued at 23 cents per share. The problem for small shareholders is that Bruce Gordon, who owns nearly 15% of the company, and Lazard Asset Management, which owns 6%, plan to oppose the deal on the grounds that the US companies would not be able to add any value.

Ready for Profits?

I strongly believe that Ten is a diminishing force, the Fairfax Media Limited (ASX: FXJ) of television, which appears to be in a sustained and painful decent towards minimal market share and tough trading times.

Speculators will be picking up Ten stock on the hope that they can cash out when a concrete bid comes through, however this isn't a particularly intelligent way to invest – just look at the share price of Graincorp Ltd (ASX: GNC) for an example of what can happen when a takeover offer falls through.

Here's how you can profit

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