Well those that have read and followed my posts on Aurizon over the past several months and beyond have known that I mentioned many times if management continued on their existing path which was essentially destructive shareholder value by failing to meet targets, encountering multiple operational problems which are used as excuses for failure to reach targets, letting a large cash treasury sit there unutilized that others covet, and the net overall result was a languishing declining and stagnant sp that eventually will end up either firing the CEO and changing the board/management or subjected to a hostile takeover bid at a relatively lowball price.
Now they find themselves in a pickle because operationally Aurizon is in terrible shape since 2013 is a complete wash as a transition year and they cannot defend or justify their performance and/or assets. Thus many shareholders do not have much hope for this company and likely desperate to sell their shares at any reasonable premium even if the overall valuation is low. Again, management is solely to blame for non-performance that led to having their sp hover continuously near 52-week lows for extended periods.
I would have expected any potential suitor to make a bid in mid-2013 onwards after some of the Casa Berardi challenges are behind them, but I understand the reason for why Alamos is striking now when the sp is likely at its weakest making it a rather opportunistic bid. Their cash and share component are both capped off at around 50% each so assuming 50/50 cash/sh based on a current $15.25 AGI price then the offer is valued at just under $4.50. I cannot see how Aurizon, even as pathetic as it has become, sell for under $5 in a takeover considering they already have over $1.20 cash per share in the treasury. But it is a stock market and they let the sp end up in the gutter below $3.50 and I suppose that is the end result of such mismanagement.
For me personally it is very bittersweet. As some know I wrote covered out of money calls on my stock and also sold out of money puts since I felt downside was limited and likely not much to occur with the sp for the next six months due to operational challenges. Well, my Jan calls which were scheduled to expire worthless later this week in just five more days and 99.9% of the time would have done so are suddenly worth money and thus my stock likely gets assigned. I also have some Apr calls and expect same situation. I am fairly certain all of my short puts will expire worthless now even if the bid fails since this has been a catalyst that creates perceived reawareness in the value of Aurizon in the minds of investors. But what has occurred is that the bid-asks have gapped apart to ridiculous levels on options essentially discouraging investors from conducting any transactions (e.g. bid 8 cents ask 65 cents!). Now I cannot close my positions even if I wanted to and will have to wait the next 3 to 6 months for it to expire profitably.
Oh well, I hope this is the final chapter in covering this dog stock and the story really deserves to end. I guess this takeover outcome is way better than having the sp collapse below $3 due to another unforseen screw up.