RE:RE:RE:RE:RE:Thoughts
Fantome wrote:
With all due respect....I think you need to check your facts....PPL announced the takeover of Veresen on May 1 2017 and the SP was 42...six months later the SP was 46 a share
In terms of ALA...there is no question that they overpaid for Washington Gas and had to sell off significant assets in Canada to pay for the acquisition. Was buying it a good move?.....short answer...yes with the current managment tapping into the potential of Washington Gas.....BUT...ALA shareholders did lose some very valuable assets that they don't have now to pay for it and this is reflected in the fact that the SP is still less than it was before the takeover was announced. I sold my ALA shares in the mid to upper 20s....regretting at the time that I should have sold in the 30s and didn't do my usual homework to confirm managements numbers. I bought back in in the lower to mid teens once I saw that Randy knew what he was doing and am up significantly and still ALA shares...
The other thing is that sometimes it takes a while for the benefits of an acquisition to be seen by the average person and indeed some of the denizens of the Street....ENB's acquisition of Spectra is a great example...the diversification of ENB into gas pipelines from a liquids transportation company in totay's world was extremely prescient...that said...I have pointed out in a few posts that in my experience over the decades is that the management of the company doing the buying most often overstates the synergies and underestimate the challenges of melding different corporate structures..
I do stand corrected, I remembered a fall off after the acquisition, and I quickly looked at a chart and I thought it was the late 2014 fall off so I was well off, I thought I owned it longer. The fall on purchase was Aug 2017 and twice in 2018. (The recent Covid drop off doesn't bother me, but it does show up strongly in my account numbers) Also PPL dividend was 17 cents on that announcement after they increased it, and increased it following the the closing in the fall to 18 cents. So in 4 years the dividend has grown 4 cents to today so the dividend has grown about 20%. Just to finish off my fact checking for now. (I may go look for some of the offer mailings and check the statements they made if I get bored, I think I still have most of the Veresen booklets, I had pride in that investment as I more than doubled my investment in a short period of time and it was one of my first 2 companies in my TFSA when I started out)
I also re-read my post and some of my spellings were very poor with missing letters and difficult to read, sorry for that. I had thoughts and points running and I was just trying to spit it out quickly and I didn't review it well.
I wasn't as worried about the over paying for assets in the ALA case, nor other in situations, but I like keeping the other stuff that was still very good. I hated the out right selling and then the spinoff that eventually got eaten up. I dislike selling 'non-core' assets because I'd have prefered my company to have had a few entities that were well proven as quality, especially that spin off. I should have sold off ALA myself when I seen issues arising, but I liked what I held and didn't think it would fall like it did. I did add to my position twice on the way down as I didn't have a full position.
I also fully agree and was really the point of my previous post, overstating the synergies. When this closes it's gonna take a few years before IPL is fully integrated. We will see the revenue hit the books right away, but full profit potential may take 2-5 years and it will take a while to pay down this debt and take the interest expenses down.
I really liked the potential of the polypropylene plant that we shelved and a couple other things we had going on. I was disappointed with canceling and shelving, but pulling in the IPL pieces are very replacements and expansions. Pembina working on expansion is nice, rather than several others that are that are dropping and doing damage reduction.
Hopefully we are going to be ok debt rating wise at the end of all this expansion, that is always a big struggle, sometimes worse than regulators and politicians. We will be fine carrying it and paying for it all with comfort, but if them and other market extremities don't like how deep we get they can hurt us for precieved 'safety'. With IPL take over I think I read actually makes us stronger with increased cash flow when Heartland comes online and the entity overall is much bigger and diversified to value the debt against. But I haven't heard what the potential deals with Trans Mountain and Cedar LNG do in affecting our balance sheet short term.
As I sated before, the plans sound great, but the end game hasn't been great with everything to this point. If we get most of what they state, we are going to be doing very good long term and I'm excited about the outlook.