Further to yesterday's update discussing the 'material adverse change (MAC)' clauses for Sydney Airport (SYD) and Z Energy (ZEL), we have spent some time poring over the language in each of the scheme implementation agreements for our holdings within the Event Portfolio.
In the case of Australian Pharmaceutical Industries (API), Ausnet Services (AST), iCar Asia (ICQ), Sydney Airport (SYD) and Prime Media (PRT), there is an obvious intent within the clause that any impact from new variants of COVID-19 would not provide the bidders with a loophole to escape their obligations under the contract. However, ZEL is a little more specific with the bidder’s rights under certain circumstances but, in our view, still provides enough protection for shareholders.
We have seen a little selling in each of these names, although nothing to concern us, and in times of increased volatility, it’s not uncommon to see spreads blow out on some of these takeover arbitrages. All of the names mentioned above remain holds or buys at or below our earlier recommended buy prices.
