My fears regarding this merger have been confirmed today with the RNC share trades. The RNC SP has gone from $0.10 to $0.15 on the merger news. Why? Because value is being transfered from BOL shareholders to RNC shareholders.
How can it be that a merger of two companies is allowed to happen where all shares in both companies are valued equally? BOL has more net assets and a higher market cap than RNC yet that is being ignored in this merger.
I was hoping that the stock exchange rules would not allow such a merger but obviously the protection of the small, minority investors is not there.
I only own shares in BOL and I feel this merger disadvantages me. RNC shareholders get to "eat their cake and keep it too" i.e. a couple of months ago RNC and BOL had about the same level of net assets (after Dundee Corp invested in both companies), but since then RNC has drilled some holes that turn out to be duds. Would they have shared the gains with BOL if they had turned out to be winners? No. But if there are successful results from BOL's prospects then we now have to share the gains with RNC.
The merger should not have been on an equal basis and it should not have taken place until BOL had drilled some of it's best prospects.
For what it is worth, I will not be voting in favour of this merger.
