BASF is one of the larger companies in the world, they are more than large enough to list over here. Even if they don't list, with all float this deal will create in BASF stock over here there are plenty of market makers who would trade it through the pink sheets.
I used to own National Bank of Canada stock. It traded 5 or 6 digits of stocks a day through the pink sheets.
The lack of a listing over here is not an impediment. Losing a potential 50% of my gain to the government IS gross negligence by management.
Different shareholders apparently have significantly different tax concerns. Reading the tax release from the company and only knowing the tax laws from what I read in the papers, AMCOL's corporate shareholders will report a larger share of the liquidating dividend as dividend income than individuals. This could lead corporate holders to opt for all capital gain and sell now - thus the selling pressure now. Depending on their basis, individuals may opt for that too.
But who want to buy now? You pay $16 for a $14 dividend in April and a stock that is difficult to really assess in the short term (the period shortly after the dividend record date). Many do not like stocks below $5. Others like only stocks under $5.Some were investing in a chemical company and have no interest in a minerals company. There may be significant selling after the liquidating dividend. Then, your $16 may get you 8 shares instead of 2. Many (which has a strained definition for this stock since so few watch it at all) are waiting to buy it at that time.
The big mystery in my mind is why AMCOL's management would structure the deal in this way. In my opinion they could have done a much better job for their shareholders. ACO was a stock conservatively worth about $22/share without any buyout. It was growing at least 20% with forward earnings of $1.10. Historically it has traded with a 20 multiple under these conditions. Sure, the market did not recoginze that but then what small cap value firms has it recognized lately? History shows that conditions like this will exist from time to time but the value is always eventually recognized.
The BASF deal, while certainly a good way to unlock the value here, was executed poorly. Instead of doing an asset sale where now both the company and the shareholders have to pay taxes on the gain, I don't understand why they did not do a stock deal -- giving shareholders a distribution of BASF shares instead of cash. With BASF paying around $650M for Chemdal alone and even after subtracting the $100M in debt the entire company had outstanding, this was worth about $20/share to ACO shareholders based on the 27 million shares of ACO outstanding -- and that is only for the Chemdal portion. For their investment bankers to say that this is a fair deal for shareholders is irresponsible and invites a lawsuit in my mind.
Nevertheless, with ACO trading around $16/share today there is still value here. Given that Chemdal contributes about 2/3 of the earnings and that ACO is expected to earn $1.20 over the next year, we should expect the remaining company to earn about 40 c/share in 2000. What is this remainder worth? Certainly the growth rate will be lower. I don't think we will see 20% again unless/until the nanocore business starts to take off, so if you look at S&P historical data before Chemdal existed it shows that ACOL traded with a PE of roughly 10-29. Taking the worst case of 10, the rest of ACO is today conservatively worth $4/share based on earnings of .40/share. So since shareholders are going to get at least $14/share for Chemdal we really should be trading at $18/share. Why then $16? Well, there is a possibility the deal will not go through (which would be a good thing for shareholders in my opinion). But if you think the deal will go through it is probably better to wait for the distribution because ACO should be trading at around $4 after the event.
The unfortunate outcome of this story is that shareholders really should have received a minimum of $24/share. If management would have had some patience and focused on growing the company instead of trying to cash out in this manner the market would eventually have recognized this and I think we all would have been a lot better off.
Your post is appreciated. I was starting to wonder if anyone was interested in this board - or for this company. They are down to one analyst following them. Some answers to your questions are found in the transcript of the conference call when they announced the deal. This transcript is posted on the company's corporate web page. They have said that the deal is worth doing because they are the only substantial SAP supplier without an in-house supply of acrylic, a major cost component, and they felt they could get squeezed. The structure of the deal was required to get the deal done, and BASF paid up substantially to do the deal this way. Accepting those statements, the company still could be purchased at a deal to your liking. There are $200 million going to the government out of the $656. Offering the same cash to the shareholders instead of the company would yield $22/share and give the buyer the whole company. If this is a deal, you would think that someone would make a bid, even in stock. If they don't, perhaps it is not so great a deal. I like your value analysis. Also note that the book value of the remaining business is expected to be around $4.75/share. If your numbers go way back, can you confirm that the company used to trade between 1 and 2 (or more)times book? I think people are not interested in paying $16 or $17 for a stock to get a $14 dividend in April and a stock worth $4. Why not wait until the X-div date and buy it at 2 or 3 as some shareholders sell their stock. Many do not want a company this small. While I too would have preferred more, waiting for the market to respect what they are doing has certainly been exasperating.