Stocks bidding

The U.S. Defense Logistics Agency (DLA), which maintains the U.S. National Defense Stockpile (NDS), sold 267 t of stockpiled mercury in 1992 (14). The DLA also sold 103 t of secondary mercury from the Department of Energy (DOE) stocks at Oak Ridge, Teimessee. The DLA accepts bids for prime virgin mercury on a daily basis, and for secondary mercury once a month. Inventories on December 31, 1992 were 4766 t of mercury in the NDS and 121 t of DOE mercury (14). The goal for both is zero. 

Bottom line, valuation in biotech companies is analogous to bidding on eBay if there are more buyers for a deal than stock available, premoney value rises if there is a shortage of buyers, premoney value falls. The key to doing a strong deal is to orchestrate a shortage of stock and an excess of buyers. 

Another consideration which affects the value of an asset is the currency that is used to pay for it cash, equity or goodwill. Equity in place of cash can either be a compelling offer or quite the opposite. On many occasions when evaluating the value of a potential acquisition target the value of a cash bid compared to the headline value that other companies were prepared to offer in the form of shares in their own company made poor comparison. The acquisition of Agouron by Warner-Lambert in 1999 was one of several deals at the time which were funded by an offer of stock of the acquiring company. 

What stems from this discussion of these factors is the realization that value can be viewed from a myriad of different perspectives, angles and directions, whether it s buying or selling, solicited or unsolicited bids, cash or stock and the timing of the payments to name but a few. 

Harris, Gardiner, Merck To Shed Medco, Its Drug-Benefits Unit, in Bid to Boost Stock, The Wall Street Journal, January 29, 2002. 

In this chapter we consider some commercial routes and emerging technology for the production of olefins Irom coal. For the most part olefins are made from natural gas and crude oil derivatives - LPG, naphtha, gas oil or residual fuel oil. The cost of these feed-stocks are tied one way or another to the prevailing price of crude oil and the petrochemical operations have to bid for feedstock against the oil-refiners demand for them to produce transport fuels. For example, a major feedstock is ethane. In developed economies the price of ethane is directly linked to the prevailing price of crude oil or indirectly via the natural gas price, which is linked one way or another to the price of crude oil. 

A reserved amount of stock at each auction, available at noncompetitive bid prices (currently this is 1/2% of the issue for each GEMM, or 10% if an I-L gilt). 

Auctions are the primary means of issuance of all gilts, both conventional and index-linked. They are generally for 2- 3 billion of stock on a competitive bid price basis. Auctions of index-linked gilts are for between 0.5 and 1.25 billion. The programme of auctions is occasionally supplemented in between auctions by sales of stock on tap. This is an issue of a further tranche of stock of a current issue, usually in conditions of temporary excess demand in that stock or that part of the yield curve. That said, only one conventional stock has been tapped since 1996, a 400 milHon conventional tap in August 1999. The DMO has stated that tap issues of conventional gilts will only take place in exceptional circumstances. 

Periodic dual auctions were also introduced. Dual auctions allow the issue of two stocks of different maturity in the same month, which moderates the supply of any one maturity and also appeals to a wider range of investors. Market makers (GEMMs) were allowed to telephone bids in up to five minutes before the close of bidding for the auction. 

Auction bids for I-L gilts are also competitive and noncompetitive. Only IG GEMMs may make competitive bids, for a minimum of 1 million nominal and in multiples of 1 million. For I-L gilts there is a uniform price format, which means that all successful bidders receive stock at the same price. A bid above the successful price will be allotted in full. Noncompetitive bids must be for a minimum of 100,000, and will be allotted in full at the successful bid price (also known as the strike price). IG GEMMs are reserved up to 10% of the issue in the noncompetitive bid facility. Non-IG GEMMs must complete and submit an application form in the same way as for conventional gilt auctions. 

The DMO acts as a buyer of last resort for gilts that have been designated rump stocks, for which GEMMs are not required to quote two-way prices. Although the DMO only deals direct with GEMMs, institutions or private individuals can ask for a bid price via a broker, who will deal with the GEMM. 

The DMO will acquire amounts of stock as a result of its secondary market operations, and these holdings may be made available for resale into the market. Although it does not actively offer stock to the market, when holdings are made available from its portfolios the DMO will announce via its news screen the stock on offer, and the size available this is known as the DMO s shop window. No offer price is indicated, but bids must be at the market level or above acceptance is at the DMO s discretion. If more than 50 million of one issue is on offer a minitender is held, announced via the DMO s news screens. 

The seller in a classic repo is selling or offering stock, and therefore receiving cash, whereas the buyer is buying or bidding for stock, and consequently paying cash. So if the one-week repo interest rate is quoted by a market-making bank as 51 5 4, this means that the market maker will bid for stock, that is, lend the cash, at 5.50% and offers stock or pays interest on borrowed cash at 5.25%. In some markets the quote is reversed. 

Sale and repurchase Bid at repo rate bid for stock, lend the cash... 

---