Memstar

Memstar: ($0.131) Potential arbitrage opportunity; We highlight an arbitrage opportunity for Memstar, based on United Envirotech's (UENV) current price of $1.445. To recap, Memstar shareholders had approved in its recent EGM, to sell Memstar’s entire core operating assets to UENV in a deal valued at $293.4m. Post transaction, Memstar would effectively be left with $73.4m cash (2.8¢ per share) and 200.1m UENV shares (25% stake) as its key assets. The long stop date for the disposal will be on 28 Apr 2014. This means that Memstar’s fair value can be linked directly to UENV’s share price, with the calculations as follows: = [$73.4m cash + (200.1m UENV shares x $1.445 current share price)] / 2,661.41m Memstar shares With UENV trading at $1.445, this equates Memstar shares to $0.136, or 3.8% above its current price of $0.131.