Monday 7 October 2013

Paperlinx Ltd (PXP) and Paperlinx Hybrids (PXUPA)

This article should be read in-conjunction with the previous post Elders Ltd (ELD) v Elders Hybrids (ELDPA): Reservoir Dogs edition

PPX has announced a fairly vague update regarding a potential acquisition of PXUPA hybrids in November. No details have been provided as to pricing, terms and whether the offer might be cash or scrip. Apparently the discussions have had strong support from PXUPA holders. 

Some people in the market think a transaction will happen with a figure of $20 per PXUPA has been touted. Result: the PXUPA price has kicked up to $12. 

This all continues to look like a minefield. It's not the first time a deal has tried to be done. The capital structure puts PPX and PXUPA holders on a collision course with each other. However for the major contrarians out there: the underlying business is worth some more analysis. The upside on PPX could be substantial if the company is ever turned around and PPX shareholders aren't massively diluted in the meantime. 

Kristian 

Disclosure: no position in any of the above. 


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