N’S pursuit of CSC has been a textbook example of how not to handle a takeover bid. First it said it would bid for CSC on the precondition it did not purchase the Trafford Centre (providing all sorts of reasons for why it was a bad purchase); then it offered to finance the acquisition of the mall instead of Peel (destroying its own arguments against the purchase); now it is back with an indicative offer of 425p – again providing management does not purchase the Manchester shopping centre.
But CSC knows it has to at least consider Simon’s offer, which represents a 21 per cent premium over the stock’s closing price in the past six months. That would allow shareholders to exit their investment at a 13 per cent premium to the last reported Net Asset Value of 377p.
Simon’s advances will provide support for the share price in the near term, but we think its flip-flopping speaks volumes about the probability of an eventual deal. This is less holy matrimony and more transatlantic teenage crush. Savvy investors will get out while the going is good.