Full disclosure: Long Pepper. Do your own research prior to making any investment decision and seek personal and professional investment advice. This post is not a solicitation to buy or sell any stock.
One of my main portfolio holdings and recent purchase, Pepper Group (PEP:AU) is reportedly in advanced talks with private equity group KKR for a takeover in which according to the Australian Financial Review:
“KKR is expected to seek to gain control as part of the deal and Pepper would no longer be listed on the Australian Securities Exchange.”
The stock is up approximately 9% today (to $3.75 at time of writing), but my heart sunk like a stone through water. As a small investor, I have no real say on the transaction price, and I suspect the offer won’t be that close my estimate of it’s future intrinsic value, which was around $6.40-$7.35 (my optimistic case for 5 years out was even higher, around $10-11). In my original post, I called takeover a “slight risk” which risk I now think is fairly substantial.
If it goes through, I’ll happily take the profit, but a takeover certainly wasn’t what I was expecting this soon, and any profit in the near term I can put
mostly entirely down to luck. Alternatively, it could all fall through (the company hasn’t confirmed the rumours), but I suspect in the next few days or a week or two in latest, the company will make an announcement, confirming, denying or perhaps obfuscating whether talks have been had and where the company is headed.
As always, thanks for following along!