Monday, February 19, 2007

Funtastic trying to hide takeover talks

There was some news today on Funtastic Limited (ASX:FUN):

Toy company Funtastic says it has received an approach that could lead to a takeover bid. Day care chain ABC Learning says it has been approached by a third party regarding its stake in Funtastic. Any takeover would have to be approved by ABC Learning. It says the plans are in the early stages. ABC Learning has also reported a 57 per cent increase in after tax half-year net profit to $64 million.

Another article says :

When it came to playing down a takeover approach, Australian toy company Funtastic took no chances. In a mastery of understatement, the company confessed it had received a “confidential, preliminary, incomplete and currently unfunded,” proposal. So top secret and confidential was this approach that Funtastic shares, which fell sharply in November after the company predicted that its results would not meet expectations, jumped more than 5 per cent on Friday, prompting a query from the stock exchange regulator. The shares traded up almost 10 per cent further on Monday to A$1.94. So preliminary, that the company’s biggest shareholder, ABC Learning Centres swiftly followed with a statement that it too had been approached about its 18 per cent stake in Funtastic but that no decision had been made. And so incomplete, that they’ve already got round to talking funding. In fact, this approach was obviously so trifling that, more than five hours later, Funtastic’s statement was still strangely absent from the ASX announcements section of the company’s website. A.B.C, Australia’s top childcare centre operator, said it had not made a formal approach to Funtastic itself but had been approached by another party.“A.B.C. has been approached by a third party in relation to a joint transaction which, if implemented, would result in a change in control of Funtastic,” A.B.C. said in a statement.
Looks like Funtastic has finally got a move on. I have been preaching the value in this company in various posts such as here, here and here.

It has been a main part of my portfolio for a fair while now and I have made gains from $1.20 up to the current price of $1.90

I believe the price on offer if it comes will be in the $1.90 - $2.10 range although it may even be higher. The prospects for this company are being driven by the current baby boom occurring around Australia due to the baby bonus being offered by the federal government.

I am interested in seeing the price that may be offered but at this stage it is still in very early dealings and the whole thing may fall through. It is interesting to see the understatement being made on the takeover. It may be looked into in the future by regulators as directors not making all information available to the public timely is rather reckless.

This is one to watch in the next few weeks.

Good Luck Investing.

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