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September 30, 2009 – Comments (7) | RELATED TICKERS: PZE
Petrobras gapped open from like 6.5 where it was hanging out, to close near 18 today, on 10x its average daily volume. It did *not* reverse split. Nasdaq even halted trading and took a look at these trades, but vetted them and let trading resume shortly thereafter.
What the heck just happened?
http://www.thestreet.com/_yahoo/story/10605423/1/petrobras-energia-surges-180.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
They merged PZE and PBR. I'm not sure what made PZE suddenly so valuable, but some after hours trader decided to triple their value. PBR went up like 2%.
"They merged PZE and PBR. I'm not sure what made PZE suddenly so valuable, but some after hours trader decided to triple their value. PBR went up like 2%"
PZE and PBR are not merging. PBR owns a 67ish% stake in PESA. PESA is the holding company that controls PEPSA (PZE). The company is reorganizing so that PEPSA (PZE) holders will get newly issued fractional shares of PESA (which will take over the symbol PZE). The company is the Argentinian subsidiary of PBR and operations will not be changining. PZE shareholders will not be getting shares of PBR. It's called a restructuring but it might as well be a reverse split since you're going from 2.1 bil outstanding shares of PEPSA to 1 bil shares of PESA.
PZE is still hamstrung by the Argentinian govt. and there are still better South American oil companies to own, including PBR.
This is the press release from the investor relations website
http://www.petrobras.com.ar/Petrobras/Internet_Institucional/Ingles/Financiera/Datos%20Estadisticos/Documentos/fusionin.pdf
To me .36 PZE "old" shares (6,x$) are replaced by one "new" one (18$).
Can anyone confirm actually having made PZE a 3bagger?
It isn't a 3 bagger. You get roughly 1/3rd as many shares at roughly triple the price. It looks like even CAPs took this into account and repriced people's starting price. It's basically a reverse split.
Thanks to all who responded. It's not exactly a reverse split, but for all practical purposes the event behaves as a reverse split. Appreciate the replies and links.
I don't get what makes people think that the merger is kind of reverse split. That is baseless and doesn’t make sense. There is no value added to the PZE share by the consolidation of PESA and PEPSA. The merger is a basic reorganization with no asset addition to PESA. All outstanding shares of PEPSA were exchanged for their value (1 to 0.36) with ‘shares of PESA admitted to the public offering’ to make PEPSA a part of PESA and PEPSA shares being cancelled and PEPSA delisted in Buenos Aires Stock Exchange (BCBA). Thus there is no value added to either of the entities but the business model changed and that would probably be a better company together. But how better the new entity might be is definitely NOT 3 times worthy.
You can read it here on how the company is reorganized: http://www.petrobras.com.ar/Petrobras/Internet_Institucional/Ingles/Financiera/Datos%20Estadisticos/Documentos/fusionin.pdf
In a nutshell, it is pretty much like PESA acquiring PEPSA and instead of offering a cash price, PESA pays in (Class B shares) shares of PZE to the outstanding (class B shares) of PEPSA at the market value of the PEPSA shares which is approximately 36 PESA shares for 100 PEPSA shares. If you had 100 PEPSA shares then after merger you would have 36 PESA shares. That means the value PESA share will not change but the PEPSA share holders’ share value goes up three times and the number of shares will get to one 3rd which results in total asset value unchanged. The ADS of PEPSA and PESA are exchanged at the same rate so, the value of PZE should not change much.
That kind of rise in PZE share value overnight for no logical reason is not healthy and it will go down very shortly. Investors will realize when they see dividends announced.
If you own PZE shares, this is right time to sell them off. Or talk to your financial advisor.
Here are some hints:
CAPS rating went down.
Got Bull flag
Watch the volumes when the price is going up.
More related Info:
http://www.fool.com/investing/general/2009/10/05/5-stocks-bucking-the-downtrend.aspx
http://finance.yahoo.com/news/Bull-smallcapinvestor-1328056892.html?x=0&.v=1
-SP
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