Rams Runs Hot With Speculation Of A Takeover Bid By One Of The Big Four
The Age
Tuesday September 25, 2007
MORE than 10 per cent of the troubled mortgage lender RAMS changed hands yesterday as speculation swept the market that a predator - possibly one of the Big Four domestic banks - was stalking the company and set to mount a takeover bid.
In the biggest day's trading in the stock since the housing financier alerted the market to its short-term commercial loan funding crisis in mid-August, the prospect of a suitor building a significant stake in RAMS pushed its share price up nearly 17 per cent to 97? by yesterday's close.Both NAB and Westpac said it was not their policy to comment on market speculation.The two banks considered acquiring RAMS when its founder and current chairman, John Kinghorn, was pursuing the twin-track plan to either sell the company or list it on the ASX.Mr Kinghorn eventually went for a float after failing to get a bid high enough to match an estimated $1 billion valuation. He sold just over 70 per cent of RAMS in the listing, which earned him $650 million. He still holds 20 per cent of the company and remains its biggest individual shareholder.Just under 36.4 million shares were traded during yesterday's session as lines of stock ranging from 100,000 to 700,000 went through the market in a hectic period during the morning.As rumours percolated through the market that the buyer could be National Australia Bank, RAMS' price picked up from its starting point of 84? and rose briskly to close with a gain of 14?.The volume of stock traded would have given a single buyer the equivalent of a 5.2 per cent holding - enough to trigger an official notice to the company. .A RAMS spokeswoman said last night it had not received any such notice or communication after yesterday's heavy buying, or as the result of a purchaser topping up its holdings over the disclosable limit following the volumes traded last week, when a total of 54 million shares changed hands."The share price is a matter for the market," added the spokeswoman when asked to comment on yesterday's climb.The 14? rise added $50 million to the company's market capitalisation albeit that, at $343 million, that is still $540 million less than when it floated on the ASX just two months ago.Shareholders who bought in at the offer price of $2.50 a share have since seen the price drop as low as 55? and then jump back over $1 as the company has been battered by its failure to refinance more than $6 billion worth of loans that underpin its mortgage business.Last week the shares traded between 75? and 83?, depressed by the global credit crunch. Analysts estimate RAMS could be worth anything between 72? and $1.89 a share to a buyer, depending on its financial standing at the time.
© 2007 The Age