Shares in engineering service provider Transfield Services Ltd [ASX:TSE] bucked the Aussie share market’s downward trend today, closing up by 1.6%. Transfield Services shares have traded in a tight range since the company received a surprise takeover offer three weeks ago.
Last night Transfield announced that it would grant limited due diligence of its financials to its Spanish suitor, Ferrovial SA [BME:FER]. This follows Ferrovial’s conditional and non-binding proposal to acquire Transfield at $1.95 per share.
This improves the likelihood of three potential outcomes: Ferrovial makes its $1.95 per share offer binding, it sweetens the deal with a pricier offer, or Transfield’s granting of due diligence coaxes a rival suitor to make a superior bid.
All three outcomes look attractive for Transfield shareholders, which is why the share price rose today.
Buying a takeover target on the hope that a rival suitor will make a higher offer is a high-risk strategy. Transfield shareholders should strap themselves in for a robust tussle over their company…but new shareholders seeking big returns may find better reward for their risk elsewhere.
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