Hedge funds cash in on rise in hostile bids
Monday, March 6, 2006 : PermalinkTimes of Malta – Hedge funds are filling their boots on share speculation, as European hostile or unsolicited M&A bids reach a six-year high, fund sources say.
Unsolicited bids are good news for share-speculation – the initial bid is typically rebuffed, increasing the chances of a second or rival offer and resulting share price hike.
In a recent textbook case, shares at ports firm P&O rocketed 65 per cent during a three-month bidding war between Dubai Ports and PSA International, ending in Dubai Ports second, 520 pence offer.
Its shares were trading near 315 pence per share before the first offer at 443 pence.
“With this activity, specifically the amount of hostile situations, counter bids, multiple bidders, returns in this space should be good for a while,” said one hedge fund manager.
Froth in the M&A scene has arisen as corporations flush with cash scour the financial markets for rivals, after a four-year spell of low interest rates and keen global demand.