Shapeshifter
Dear strawpeople what is the best thing to do in this situation?
Uniti is in the throws of a takeover that is almost certain to go through from HRL Morrisison & Co and its partner Brookfield Infrastructure. The share price has stabilised and is close to the offer price of $5. There is not much left except a special dividend and then senorita.
Should I sell out of Uniti now that the takeover is almost certain. Or should I wait. What is the benefit of waiting? Can you please educate me.
Bear77
19-Apr-2022: I reckon there's a better than 90% chance this deal goes through at $5/share, and it should be noted that the $5 purchase price will be reduced by any special dividend they pay, which the signed and binding scheme implementation deed (SID) allows for, and Uniti seem to be keen to pay a special div. Because the $5/share purchase price is going to be reduced by the value (per share) of any special dividend, the only real benefits in waiting (for current holders) would be (a) you'll pay no brokerage fees when Morrison/Brookfield buy your shares, and (b) the franking credits that you get with the special dividend will be cream on top (extra benefit) for those who are in a position to be able to use those franking credits to increase their tax refund, or to reduce their tax payable to the ATO. Uniti have made it clear that those attached franking credits will NOT affect the $5/share purchase price, even through the underlying dividend (ex-the-franking credits) WILL affect it.
They put it like this:
"Uniti also intends to pay a fully franked special dividend on or before the Scheme implementation date (Permitted Dividend). There may be an opportunity for eligible shareholders, subject to their marginal tax rate, to receive a benefit from franking credits attached to any such Permitted Dividend. The amount payable under the Scheme will be reduced by the cash amount per share of any Permitted Dividend (but not the value of any franking credits). The declaration and payment of a Permitted Dividend remain at the discretion of the Uniti Board and will be subject to tax advice."
The rival bidders are the "Connect Consortium" ("Connect"), which includes MIRA (Macquarie Infrastructure and Real Assets) and the Public Sector Pension Investment Board (PSP Investments) and they were the first to bid $5/share for Uniti, which trumped the original $4.50/share Morrison bid. However, the $5/share bid from "Connect" was highly conditional, and one of those conditions was that they would be given full access to UWL's books and records so they could do proper DD (due diligence).
When Morrison partnered with Brookfield to up their offer to match the $5/share "Connect" proposal, they made it crystal clear that they would walk away if Uniti opened their books to MIRA to do DD (MIRA being part of the "Connect Consortium") on the basis that MIRA are part owners of Vocus, a direct competitor of Uniti - see here: About Vocus | Vocus
I sold all of my Uniti BEFORE the first $4.50 takeover offer was lobbed in, so while I did make good money from Uniti, I clearly could have made even better returns if I'd waited until now to sell. That said, UWL closed at $4.97 today, but they traded as high as $5.015 during the day, so if I could get $5/share or more on-market, with online brokerage costs being as cheap as they now are, I'd most probably sell here rather than wait, but that's without knowing how big the special dividend is likely to be; The attached franking credits could be largely immaterial or they could be substantial, depending on how many shares you hold and how big the spec. div and associated franking credits are.
Obviously not financial advice, just working through what I would do based on what we know now, IF I still held them.
The main men at Uniti now, shown above are Michael Simmons (top) and Vaughan Bowen.
Does anybody remember these two (below) ??
They (Che Metcalfe and Sasha Baranikov) were actually the founders of Uniti and they got shafted very quickly when Simmons used their company to backdoor in some other assets that he came in with. He was hired as Uniti's MD and he convinced the UWL Board to dump (sack) Che Metcalfe and Sasha Baranikov as soon as he took over the top job. Che and Sasha were completely blindsided and very upset. Vaughan Bowen joined the company later, but bought with him a pending court case (him personally, does not involve Uniti) because he has been charged with insider trading when he was at Vocus. That case was recently adjourned until later in the year or next year.
Guess who the largest shareholders in Uniti are now? Hint: Simmons owns around 6.4m shares plus another 8.1m options, while Bowen owns over 15m shares and around 4.3m options. There are no current substantial shareholders listed, as both QVG Capital and SOL (Washington H. Soul Pattinson and Co) have sold down (to below 5%) or out altogether. It is my understanding that Metcalfe and Baranikov have also sold down and possibly out altogether some time ago.
Further Reading:
https://thewest.com.au/business/the-asx-has-cast-doubt-on-uniti-wirelesss-candour-about-the-events-leading-up-to-sacking-its-adelaide-co-founders-ng-a115331026eae2804603d6d7b1a0f08f [March 2019, West Australian Newspaper]
https://www.afr.com/street-talk/uniti-group-takes-takeover-disclosure-to-new-level-20220124-p59qnl [may be behind a paywall]
It seemed a bit whiffy at the time... Seems to be forgotten now tho... 3 years can be a long time in the market... Or not.