Shire Pharmaceuticals (SHP) Gains US Approval for Alzheimers Drug
Hi Uncle and Steve, and other members watching or holding SHP...
We're going to have eye-strain watching SHP, not that it didn't pay in the past...but as we want to make more out of this baby, we'd better put the reasons behind the current fall clearly, so we know what we're watching about...because it has come to a point that a short term view is even more risky now unless it's an intra hour trade...it may go up or down by 100 any day from now on..
I threfore decided to take a close look at this arbitrage issue...here is some details that I've come up with:
1) Heavy short selling by merger and acquisition arbitrage funds is the reason behind the depressed price of late...
2) They aim to profit by converting BioChem stock into SHP's at the lower end of the deal's tiered conversion structure, which is based on a 15-day price average...
3) These arbitrageurs have been short-selling on assumption that the deal will close - and the 15-day average be settled - around the March 31 deadline...
4) Ministry of Industry Canada, the regulatory body is reviewing the deal. The initial review ended March 1, triggering an additional 30-day period through March 31...
5) There's no guarantee that regulators will approve the deal by March 31. If they don't, the review rolls over into an open-ended period which has no set expiration date for arbitrageurs to rely on...in other words the deal can be approved any day...
6) These arbitrage funds have opened short positions SHP and long on BioChem to keep SHP share price depressed enough to reap the better conversion rate under terms of the stock-swap...
7) This is why volume has been massive for the last 4 trade days; 18 million Tuesday, 11.7 million Wednesday, 15.5 million Thursday and 9 million Friday...compare these figures with 800,000-a-day average volume and you'll see how aggressive the game is played and how big the money is used...
8) What are they trying to achieve?
Under the merger terms, if SHP ADSs trade between $47.20 and $70.80 at the date of completion, BioChem shareholders get $37 worth of SHP ADSs per Biochem share. Trading above $70.80 gives BioChem holders 0.5226 Shire ADSs, but anything below $47.20 gives BioChem holders a much better conversion rate of 0.7839. SHP ADSs closed friday at $40.50...
So they've been successful so far in spite of the rise on Friday...
But they have one serious problem...
The stock swap is based on SHP's share price on a 15-day average, ending on the third trading day prior to the deal's close. Mindful of this, arbitrageurs started shorting Shire shares around March 6...
What if the deal doesn't close by March 31?
There's probably going to be a lot of shorts moving to cover their positions...
Over all next week is decisive, if they get a signal that the deal will be closed by 31st march, they will keep depressing the price for a few more days...If not they'll rush to cover their short positions and we'll be watching SHP flying...
That's the trick...we either watch SHP close enough to make use of the trick or wait till the deal is closed to get in, or watch and trade it intra hour if we're equipped enough for that...
Good luck...Whatever it is for you...
Riz
(Info from DOW JONES NEWSWIRES)
We're going to have eye-strain watching SHP, not that it didn't pay in the past...but as we want to make more out of this baby, we'd better put the reasons behind the current fall clearly, so we know what we're watching about...because it has come to a point that a short term view is even more risky now unless it's an intra hour trade...it may go up or down by 100 any day from now on..
I threfore decided to take a close look at this arbitrage issue...here is some details that I've come up with:
1) Heavy short selling by merger and acquisition arbitrage funds is the reason behind the depressed price of late...
2) They aim to profit by converting BioChem stock into SHP's at the lower end of the deal's tiered conversion structure, which is based on a 15-day price average...
3) These arbitrageurs have been short-selling on assumption that the deal will close - and the 15-day average be settled - around the March 31 deadline...
4) Ministry of Industry Canada, the regulatory body is reviewing the deal. The initial review ended March 1, triggering an additional 30-day period through March 31...
5) There's no guarantee that regulators will approve the deal by March 31. If they don't, the review rolls over into an open-ended period which has no set expiration date for arbitrageurs to rely on...in other words the deal can be approved any day...
6) These arbitrage funds have opened short positions SHP and long on BioChem to keep SHP share price depressed enough to reap the better conversion rate under terms of the stock-swap...
7) This is why volume has been massive for the last 4 trade days; 18 million Tuesday, 11.7 million Wednesday, 15.5 million Thursday and 9 million Friday...compare these figures with 800,000-a-day average volume and you'll see how aggressive the game is played and how big the money is used...
8) What are they trying to achieve?
Under the merger terms, if SHP ADSs trade between $47.20 and $70.80 at the date of completion, BioChem shareholders get $37 worth of SHP ADSs per Biochem share. Trading above $70.80 gives BioChem holders 0.5226 Shire ADSs, but anything below $47.20 gives BioChem holders a much better conversion rate of 0.7839. SHP ADSs closed friday at $40.50...
So they've been successful so far in spite of the rise on Friday...
But they have one serious problem...
The stock swap is based on SHP's share price on a 15-day average, ending on the third trading day prior to the deal's close. Mindful of this, arbitrageurs started shorting Shire shares around March 6...
What if the deal doesn't close by March 31?
There's probably going to be a lot of shorts moving to cover their positions...
Over all next week is decisive, if they get a signal that the deal will be closed by 31st march, they will keep depressing the price for a few more days...If not they'll rush to cover their short positions and we'll be watching SHP flying...
That's the trick...we either watch SHP close enough to make use of the trick or wait till the deal is closed to get in, or watch and trade it intra hour if we're equipped enough for that...
Good luck...Whatever it is for you...
Riz
(Info from DOW JONES NEWSWIRES)
Riz, very many thanks for throwing more light on this and to the reasons how the manipulators, manipulate the price. This must have been a day traders dream stock if they had the bottle to trade it, however I have learned patience is the name of the game and will only venture when all the indicators are showing positive and the shennanigans have abated.
Keep watching this space folks.............
John
Keep watching this space folks.............
John
Update on Merger
"Shire announces the Minister of Industry will not be in a position to approve Shire's proposed merger with BioChem within the current review period ending on 31 March. Instead, the Minister has advised Shire that he is not at this time, based on representations made by Shire, satisfied that the proposed merger is of net benefit to Canada.
Shire is engaged in ongoing and active discussions with the Minister with a view to reaching a satisfactory resolution. Shire is entitled to make representations and submit undertakings within the next 30 days or such further period as may be agreed on by Shire and the Minister. Although the Minister is carefully reviewing the effect of this transaction from a Canadian perspective, Shire remains stongly of the view that the transaction benefits both BioChem and Canada as a whole and remains firmly committed to obtaining the Ministers's approval in due course.
Further announcements will be made when appropriate."
Meanwhile I trust some of your have taken advantage of the recent rise in price.
Best wishes
John
"Shire announces the Minister of Industry will not be in a position to approve Shire's proposed merger with BioChem within the current review period ending on 31 March. Instead, the Minister has advised Shire that he is not at this time, based on representations made by Shire, satisfied that the proposed merger is of net benefit to Canada.
Shire is engaged in ongoing and active discussions with the Minister with a view to reaching a satisfactory resolution. Shire is entitled to make representations and submit undertakings within the next 30 days or such further period as may be agreed on by Shire and the Minister. Although the Minister is carefully reviewing the effect of this transaction from a Canadian perspective, Shire remains stongly of the view that the transaction benefits both BioChem and Canada as a whole and remains firmly committed to obtaining the Ministers's approval in due course.
Further announcements will be made when appropriate."
Meanwhile I trust some of your have taken advantage of the recent rise in price.
Best wishes
John
Down -62.0 (-5.5%) to 1075..
Found this piece of news on AFX:
"....But on the downside, Shire Pharma dropped 39 pence to 1,098 after HSBC Securities initiated coverage on the the stock with a 'reduce' recommendation and a 1,010 pence price target. Shire shares had seen a good boost over the past few sessions on arbitrage-linked short selling following news that the group's completion of its agreed takeover of Nasdaq-listed Biochem has been delayed by the Canadian government..."
Riz
Found this piece of news on AFX:
"....But on the downside, Shire Pharma dropped 39 pence to 1,098 after HSBC Securities initiated coverage on the the stock with a 'reduce' recommendation and a 1,010 pence price target. Shire shares had seen a good boost over the past few sessions on arbitrage-linked short selling following news that the group's completion of its agreed takeover of Nasdaq-listed Biochem has been delayed by the Canadian government..."
Riz
madasafish
Well-known member
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Nice trading share.. watch it eventually go to £7
Mike
Mike
Bears driven off!!
After a fascinating week watching from the side line, the Bears were finally driven off - at least for the weekend. It will be interesting to see if they return next week. The stock has traded all week between 980 and 1050 - Monday's high/low - having opened at 1030 and finally closing at 1049 today Friday.
The stock is in a long term sideways trend, but plenty to go for in the short term as and when the opportunity presents itself.
Best wishes
John
After a fascinating week watching from the side line, the Bears were finally driven off - at least for the weekend. It will be interesting to see if they return next week. The stock has traded all week between 980 and 1050 - Monday's high/low - having opened at 1030 and finally closing at 1049 today Friday.
The stock is in a long term sideways trend, but plenty to go for in the short term as and when the opportunity presents itself.
Best wishes
John
SHP still in a falling trend...
Unable to break resistance at 1136 SHP fell down -6 to 1130..thus staying within a falling trend...chart formation suggests further fall...in spite of both 14 day stochastics ticking up, RSI and MFI still ticking down with OBV flat...widening BBs suggesting more volatility at the share price...would be interesting to see where the new bottom is formed to make further comments...I'd avoid for the time being
Riz
Unable to break resistance at 1136 SHP fell down -6 to 1130..thus staying within a falling trend...chart formation suggests further fall...in spite of both 14 day stochastics ticking up, RSI and MFI still ticking down with OBV flat...widening BBs suggesting more volatility at the share price...would be interesting to see where the new bottom is formed to make further comments...I'd avoid for the time being
Riz
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madasafish
Well-known member
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Thanks.. I'm short.
Mike
Mike
Up +45 (3.9%) to 1185 after announcing strong Quarter 1 results...use the link for detalils of results
http://www.uk-wire.com/cgi-bin/articles/200104261200176683C.html
and a chart update suggesting a new possible uptrend depending on where it ends up when retracing...
Riz
http://www.uk-wire.com/cgi-bin/articles/200104261200176683C.html
and a chart update suggesting a new possible uptrend depending on where it ends up when retracing...
Riz
Attachments
Down -13.0 to 1087 ...and here is the latest news..
Riz
FTSE
10 May 2001
10 May 2001
Technical Release
Shire Pharmaceuticals Group: re Merger with BioChem Pharma Inc
Changes in FTSE Indices
In accordance with the merger offer, resulting new Shire Pharmaceuticals shares are expected to be listed on the London Stock Exchange on Monday 14 May.
Because of uncertainty on the timing of when the actual number of new Shire Pharmaceuticals ordinary shares will be known, and in order provide prior notification, the resulting FTSE index weighting changes will be applied after the close on Monday 14 May, i.e. effective at start of trading on Tuesday 15 May.
A further notice will be issued tomorrow detailing all FTSE changes resulting from the merger.
For index related enquiries or further information about FTSE please contact Client Services on +44 (0) 20 7448 1810 and US: +1 212 771 6678 and Asia
Pacific +852 2230 5800.
Or, email your enquiries to [email protected]
or visit our website at www.ftse.com
Riz
FTSE
10 May 2001
10 May 2001
Technical Release
Shire Pharmaceuticals Group: re Merger with BioChem Pharma Inc
Changes in FTSE Indices
In accordance with the merger offer, resulting new Shire Pharmaceuticals shares are expected to be listed on the London Stock Exchange on Monday 14 May.
Because of uncertainty on the timing of when the actual number of new Shire Pharmaceuticals ordinary shares will be known, and in order provide prior notification, the resulting FTSE index weighting changes will be applied after the close on Monday 14 May, i.e. effective at start of trading on Tuesday 15 May.
A further notice will be issued tomorrow detailing all FTSE changes resulting from the merger.
For index related enquiries or further information about FTSE please contact Client Services on +44 (0) 20 7448 1810 and US: +1 212 771 6678 and Asia
Pacific +852 2230 5800.
Or, email your enquiries to [email protected]
or visit our website at www.ftse.com