Does this present a Takeover opportunity for you?
Will Faroe Petroleum accept, or will DNO make a higher offer?
- The chart shows the Faroe Petroleum share price movements since Jan 2016.
- 26 Nov: 28% owner DNO makes hostile 152p offer (21% premium to Friday’s closing price)
- 27 Nov: Faroe says DNO offer opportunistic, says shareholders should reject
- Faroe says offer implies only a 1% premium to 3-month volume weighted average price
- Shares now 156p (at time of writing)
- Will DNO walk away, or will it return with an even higher offer?
- Source: Bloomberg, FT, Reuters, DJ Newswires
Trading Faroe Petroleum – An Example
Let’s say you think that Faroe Petroleum is likely to rise further as a result of a revised takeover offer above the 152p takeover offer price. You decide to buy exposure to £10,000 worth of Faroe Petroleum using a CFD, at the current price of 156p. To do this, you need £2,000.
For the purpose of this example, let’s assume the Faroe Petroleum share price rises by 10%. Your profit would be £1000, from your initial investment of £2,000.
Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. Sentiment towards the deal sours and Faroe Petroleum shares fall 5% and hit your stop-loss. Your loss would be £500.
This is provided for information purposes only. It should not be taken as a recommendation.