The Lemon Fool

(This s not about whether to make a top up or not of Unilever, that's for folk to make up their own mind).

What I want to flag up applies specifically for ISA accounts (*). If Unilever were to come "a knocking" for shareholder cash to help fund an acquistion, then it might be prudent to leave some ISA headroom so funds can be added. I was thinking about perhaps ensuring that the headroom should be 15% of the value of ones current holding in Unilever.

If one has fully one's ISA allowance for the year, then it might not be possible to participate in any offer (other than by sale of shares or by use of accrued dividends).


* (I can't comment on SIPPs as I've never had one)

Any reason for the 7% share price decrease this morning?

Does this present a buying opportunity, or is there some unforeseen risk ahead?

Paul

Just been educated on the companies board! Paul

A rights issue or any significant borrowings to fund the GSK purchase would be a signal for me to sell my modest holding

V8

88V8 wrote:A rights issue or any significant borrowings to fund the GSK purchase would be a signal for me to sell my modest holding

V8

How do you suggest any deal is structured or funded then? Does Strategic Ignorance only count so long as deals don't proceed?

88V8 wrote:A rights issue or any significant borrowings to fund the GSK purchase would be a signal for me to sell my modest holding

V8

I would probably take up my rights but we are all 'way ahead of ourselves. There is currently no deal.

Dod

I wise warning, I have found myself in this situation before and having to plan how I could be involved in a placing.

Unfortunately the company decided it was going to be a fairly regular occurance.

Having been bitten, more than once I have taken steps to avoid being in that place.

Yes a deal hasn't been agreed but they are still thinking something might be found. Debt seems to be the main concern from comments I've seen.

Having just topped up, for various reasons, including the timing of and the dividend. My concern is that they will, amongst other things cut the dividend for several years whilst adding a placement into the mix.

I have a foot in each camp and whilst I want good value for the holding, I was expecting some new free shares. Not my other half struggling not just to get the deal done but to hinder it for a while too. I still think the tax issues will be the main hurdle for a sale but if someone is willing to overpay!!!!

Gerry557 wrote:I wise warning, I have found myself in this situation before and having to plan how I could be involved in a placing.

Unfortunately the company decided it was going to be a fairly regular occurance.

Having been bitten, more than once I have taken steps to avoid being in that place.

Yes a deal hasn't been agreed but they are still thinking something might be found. Debt seems to be the main concern from comments I've seen.

Having just topped up, for various reasons, including the timing of and the dividend. My concern is that they will, amongst other things cut the dividend for several years whilst adding a placement into the mix.

I have a foot in each camp and whilst I want good value for the holding, I was expecting some new free shares. Not my other half struggling not just to get the deal done but to hinder it for a while too. I still think the tax issues will be the main hurdle for a sale but if someone is willing to overpay!!!!

Several things here. If Unilever do a fund raising if the deal is eventually agreed, it is more likely to be a rights issue than a placing, an important difference. If you do not want to be diluted then you would need to take up the full rights. You could though, just 'tail swallow', that is use the value of your rights to buy some new shares. That way you can take up some new rights without apparently costing you anything, certainly in terms of new money.

I think it very doubtful that Unilever would cut their dividend to help fund the acquisition. That would be suicide for the share price, coupled with a new and not necessarily popular acquisition.

The only 'new free shares' will come from the float of the consumer healthcare company by Glaxo so I assume that is what you mean. They may be new shares, but they will not be free. They will come at the cost of a diminution in value of the remaining Glaxo shares and we will all end up with the same assets after the Glaxo float as before. Of course one hope is that the new consumer healthcare co shares will increase in value as a standalone company as its value may be better recognised than as part of the rather sluggish Glaxo.

Dod