Sirtex Medical Limited (ASX:SRX) exited a trading halt on Friday, after announcing that it had received a second takeover bid from China-based CDH Investments at $33.60/share.
The new, conditional bid has led to Sirtex adjourning its shareholder meeting so that it can consider the proposal. Director's fiduciary duties mandate that they must consider all options for maximising the value of shareholders, so the CDH Investments bid could lead to a delay in the Sirtex takeover process.
As we have reported previously, Sirtex is currently under a binding takeover offer from Varian Medical Systems, valuing Sirtex at $28 per share. The Sirtex Board has unanimously voted in favour, and the Foreign Investment Review Board (FIRB) announced that it had no objection to the takeover. The final step was to have shareholders vote on the arrangement.
However, the CDH bid has now thrown somewhat of a spanner in the works, by delaying the proposed shareholder meeting. Indeed, it's possible the bid may have been lobbed deliberately late, in an attempt to either frustrate Varian's attempt or try to achieve a stronger bargaining position for CDH.
There is a chance that the CDH bid goes through, and there could be an 'arbitrage' opportunity available (buy shares at $29 today and sell them at $33.60 if the CDH bid eventuates). However, it is far from a certainty that a higher bid will emerge – either from CDH or from Varian. CDH may just wish to get a look at Sirtex's books to better evaluate what it is worth.
In my opinion, shareholders should watch from the sidelines for now.
