CERCG persists as Mitsui sets the date
China Energy Reserve and Chemical Australia (CERCG) has now lodged a supplementary Bidders Statement in support of its offer to acquire AWE (ASX:AWE). In the meantime, Mitsui & Co (Mitsui), a late entrant into the AWE battle has set the record date to determine those AWE shareholders who will receive the documentation pertinent to its takeover offer. But wait the market is now bidding A97.5 cents.
CERCG was directed by the Australian Government Takeover Panel (TVO) that it had to lodge a supplementary Bidders Statement.  The TVO gave the directive to address deficiencies in CERCG’s original document. CERCG has complied with the directive and has now lodged a supplementary Bidders Statement.
The CERCG bid for AWE (ASX:AWE) stands at A73 cents cash per share, which is substantially lower than the A95 cents cash per share on offer from Mitsui. The CERCG bid has been rejected by the AWE Board on the grounds of a higher bid becoming available.
Members who hold AWE (ASX:AWE) shares and on receipt of the CERCG Bidders Statement should take no action.
Meanwhile, Mitsui has set the record date to determine those AWE shareholders that will receive its Bibbers Statement that contains the details of its offer to acquire AWE. Members who held AWE shares in their portfolio on 9 February 2018 will receive the relevant documentation from Mitsui. The Mitsui bid stands at A95 cents cash per share and will close on 23 Mach 2018. The AWE Board has recommended the Mitsui bid in the absence of any higher bid.
A further suitor for AWE (ASX:AWE) in Mineral Resources has not advanced its offer at this stage.
The cash and scrip offer values AWE at around A80 to A85 cents per share. The AWE Board has rejected the Mineral resources bid on the grounds of higher bid becoming available. No action is required at this time regarding the Mineral Resources bid.
Turning to the daily chart, overhead resistance is sighted at the January high of $1.00 (psychological whole number) as marked by the horizontal red line. However, it should be noted that the rapid increase in share price following the takeover offers has resulted in the RSI to ascend, and is currently within range of overbought territory (exhaustion of short-term upward momentum). Hence, should the bears emerge over the near-term, a temporary pullback in price could follow. Positively, should this occur, we would view this short-term pause as both corrective and healthy. Medium-term momentum remains in favour of the bulls, as backed by the bullish moving average crossover present since November 2017. This occurs when the 50-day moving average (red line) crosses above the 200-day moving average (green line).
With reference to the monthly chart, our previously defined structural resistance region at the $0.95 mark as shown by the horizontal dashed-red line was recently cleared in January. This is a significant price point as it offered firm support in September 2011, after the deep sell-off which took place after prices reached an all-time high of $4.35 in May 2008. For this reason, we would expect upward momentum to rise, and a medium-term upward trajectory in the share price towards resistance sighted between $1.15 and $1.35 to be on the horizon. This is made up of the 50% and 61.8% Fibonacci retracement levels respectively. A definitive break above this price range would likely steer the broader direction of AWE, moving forward.
Members who hold AWE (ASX:AWE) shares are not required to take any action regarding the Mitsui bid on receipt of its Bibbers Statement.
We will advise Members of an appropriate course of action closer to the close date for the Mitsui bid being 23 March 2018.
At the time of writing, AWE (ASX:AWE) shares were trading at A97.5 cents, which indicates the market is speculating on a higher bid for AWE (ASX:AWE) being made and we will continue to monitor events closely.
