The Lopez Family have disclosed that they will sell their minority stake in the company to Macquarie Infrastructure and Real Assets and Arran Investment Pte Ltd. This sale will the reduce public float from 49% to 12.5%. With that also, the buying company is required to make a tender offer to the investing public. The tender offer will run form August 10 to September 18, 2017.
If your intention is to be in the stock market, I recommend that you sell your shares during the tender offer as it will be harder for you to sell later on once the company goes private because after the tender offer is done and the float will dramatically be reduced. Then the most logical step for the company is to delist EDC. (If you want to know more about delisting a company check this video out).
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According to the disclosure, EDC will be sold at 7.25 Pesos per share. This is relatively around 21.84% higher than the closing of 5.95 Pesos per share today.
Allow me to update you when a proper disclosure is given on the price of the tender offer. But if the tender offer is close enough to the price EDC was sold, you may expect an upside as compared to where the stock is now. This may also be a catalyst for buyers to rush in as the speculate on a higher tender offer price.
The charts says that there is a resistance at 6. If the market deems this news as a quick buying opportunity because of the probability of higher tender offer and the stock would breakout. The next short term resistance is pegged at 6.15. If the stock breaks out of 6.15 the next target prices are as follows: 6.6 and 7.1.
However if the stock does not break out of 6, it could possible retrace and drop to 5.70. Other indicators and technical parameters for position trading are denoting a more bullish undertone.
I hope this helps you in your trades. Please do make your own due diligence before you would act based on this news item. I hope you would trade out of a systematic strategy based on your own risk tolerance and knowledge of technical and fundamental analysis. If you want to know more about how to trade with a strategy, I hope to see you in our Stock Smarts events. God bless you and may the stock market bring you closer to your dreams of financial freedom!
