Hercules Props. Share Discussion Threads

[davethehorse] 28/9/2004 19:27

Simon - No, you cannot take 45p from the HPS share price in the calculation - this is a fixed 45p cash offer + 2.183 ERG shares per HPS share.

Therefore someone with 1000 shares in HPS gets:

45p per share = £450

+

1000 x 2.183 ERG shares = 2183 shares at 120p.


At the current share price of ERG your HPS shares are worth £450 + (2183 x 120p)

Value = £3069.60 based on the cash/share offer.

Based on the HPS share price 1000 shares is currently worth 1000 x 287.5p = £2875.

Therefore there is a difference of £194.60 which equates to about 6.5%.


Hope this helps with your calculations.

DTH

[simon gordon] 28/9/2004 18:31

Rivaldo I now understand the formula:

£1.20 x 2.183 = 2.62 plus 45p = 3.04

But HPS at £2.85 minus 45P = £2.40 which is £1.10 x 2.183

[tiltonboy] 28/9/2004 18:17

Acamas,

The bid was only worth 350p when the Erinaceous price was substantially higher. I thought that was fairly easy to see!! No smoke and mirrors just a falling ERG price.

tiltonboy

[acamas] 28/9/2004 18:01

I do not understand what is really happening at this precise moment with the takeover offer. If somebody has offered £3.50 and the directors recommend the takeover bid. THe price normally creeps up to just below the offer price. THis has gone the other way. Why? It is not logical. I feel as if there is magic at work here- smoke and mirrors- which I need to see past as to what is actually occuring and not what I see happening. This is peculiar to say the least.

[davethehorse] 28/9/2004 17:07

Sold ERG this morning at 125p and bought into HPS at 288p this afternoon - by my calculations I am about 6.5% better off than if I had held my ERG shares.

DTH

[simon gordon] 28/9/2004 16:45

How about £1.20 multiplied by 2.183 = £2.61.96

[rivaldo] 28/9/2004 16:36

Simon, 285p less 45p divided by 2,183 = 109.9p (sorry, 108p was a quickie!).

[simon gordon] 28/9/2004 16:24

Rivaldo - can you explain why it implies an ERG share price of £1.08.

The way I understand it you get 2.183 ERG shares for each HPS share plus 45p cash.

Thanx

[rivaldo] 28/9/2004 14:14

You have to laugh - 285p implies that ERG's share price is going to drop to 108p!

Is it an MM tree-shake? Perhaps they're trying to find sellers as there's another party looking for shares (he said optimistically). Whatever, we're in for an interesting few weeks. If the current price doesn't tempt other bidders out then nothing will.

[davethehorse] 28/9/2004 13:47

DROPPING LIKE A STONE NOW - WHY???????

[simon gordon] 28/9/2004 11:58

I'm off to have my testicles sewn back on.

[acamas] 28/9/2004 11:39

Hi Folks,

As the share price has fallen this morning does this mean that the market dislikes this takeover?

[mymansam] 28/9/2004 11:38

Rivaldo

Sorry my prediction proved right...........at least at the moment....hope you get a higher offer..

Regards

[chrisg] 28/9/2004 10:59

Did the guy who was doing the paperwork also get suspended for three months? Should have been!

[simon gordon] 28/9/2004 10:53

Chris the ARMA thing is a strom in a tea-cup. They will be reinstated soon. The guy who was doing the paperwork went on holiday and forgot to reply and so they got suspended for three months. It is no big deal!

[simon gordon] 28/9/2004 10:51

I meant it was a dog's because of the share prices today.

I think you are right to focus in on the ERG board's priorities and why they don't go for organic growth which they have in spades if you look at Haywards and the Lettings divisions.

After meeting Neil Bellis twice I come up with two words - ambition and FTSE250. These are the key things that drive ERG.

Here are some rough figures:

2005 - March

ERG 12 mths. 9m ebit
HPS 9 mths. 9m ebit
Ebit - 18m
Interest - 3m
Tax - 4.5m
Profit - 10.5m
EPS - 11.9
P/E at £1.28 = 10.75

2006 - March

ERG - 11m ebit
HPS - 13m ebit
Ebit - 24m
Interest - 3m
Tax - 6.3m
Profit - 14.7m
EPS - 16.7
P/E at £1.28 = 7.66

I base the EPS on 87.8m shares in issue.

The figures above do not take into account stripping out HQ costs, merged offices in London and Manchester and cross selling.

The way I see it - correct me if I am wrong - is that ERG are basically at the same place they where before the takeover but that now they will go into the Small Cap. Index and have the opportunity to sell themselves to the fund managers who will ultimatley get the share price up.

[chrisg] 28/9/2004 10:36

As a follow-up to my previous post, has ERG management's pre-occupation with their share price been behind the fact that their Haywards subsidiary been chucked out of their trade association? (See the ERG thread). If management had been watching their businesses rather than their share price, could they have prevented this from happening?

Worrying.

[simon gordon] 28/9/2004 09:58

Penpont

ERG is planning to list the new shares on the main board at the same time it delists from AIM and HPS's shares are delisted. ERG will go into the FTSE Small Cap Index when it rejigs in December.

[penpont] 28/9/2004 09:48

An additional problem here is that if you hold HPS in PEPs or ISAs you will presumably have to have the ERG shares transferred out on completion of the takeover, thus losing out on full tax protection.

[simon gordon] 28/9/2004 08:34

Cheers Chris!

Hercules Shares will be acquired by Erinaceous fully paid and free from all
liens, equities, charges, encumbrances, rights of pre-emption and other third
party interests of any nature whatsoever and together with all rights now or
hereafter attaching thereto, including, without limitation, the right to receive
and retain in full all dividends and other distributions declared or made since
30 June 2004, being the date to which Hercules's last annual audited accounts
were prepared, including the final dividend proposed by Hercules on 15 September
2004 in its announcement of Hercules's preliminary final results.



The New Erinaceous Shares will be issued credited as fully paid and will rank
pari passu in all respects with the existing Erinaceous Shares, including the
right to receive and retain in full all dividends and other distributions made,
paid or declared after the date of this announcement, including any interim
dividend which may be declared by Erinaceous in respect of the 6 month period
ending 30 September 2004.

[rivaldo] 28/9/2004 08:17

Interesting stuff. So ERG holders aren't exactly thrilled! I wonder if this will further encourage other bidders - anyone who can offer a decent amount of cash, even only around 30%-50%, will have a big advantage here. Definitely worth holding on IMO for more developments.

[topvest] 28/9/2004 08:12

The share price reaction first thing is very muted! What about a cash bidder entering the fray then...must be tempting at this price imo.