There is no doubt that economic data remain quite bleak, investor psychology is very poor and the economic recession is biting. Clearly, the spreading pessimism is having a significant adverse effect on common share prices. Nonetheless, despite all this negativity, the proposed takeover of Nova Chemicals Corp. by the Abu Dhabi-based International Petroleum Investment Co. is most interesting. The $6 U.S. takeover is at a significant premium to Nova’s stock price, about four times last week’s low, but still at a substantial discount to net asset value and replacement cost. More importantly, this deal was completely unexpected in a deeply pessimistic environment. It does highlight the fact that well-financed, opportunistic takeovers in a very challenged financial climate could become an important catalyst to provide much-needed stability in an uncertain market place.
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