What scared TyeIn the last couple of days a lot of people discussed and posted their opinions about the deal between Kinross and Red Back. What it surprises me is that nobody seems to see what is the real reason behind this combination. It is not about gold, it is not about the 2 mines that will bring profit for Kinross, it is not about "potential".
And I must admit that Tye Burt, with great ability, was able to shift attention from the real reason of this transaction.
There are three key words in all this ecuation : Tye Burt, scared and market capitalisation.
So what scared Tye Burt ? Tye was scared that another company will buy Kinross. With the shares price plunging and the market capitalisation diving Tye felt in danger. Tye felt he would lose Kinross. So, he made the move. He wanted to buy a gold company with a high market capitalisation to avoid Kinross to be bought. The hunted becomes the hunter. So, with a market capitalisation about 18 billion after the combination who would be able to bid for the new entity ? Nobody. Tye and his team keep their positions and everything is OK (for them and not for shareholders).
What will bring Tye to Red Back shareholders :
- bad management,
- bad investments,
- more dillution,
- underperforming stock
What will bring Tye to actual Kinross shareholders :
- look at the chart because another comments are useless
As long as the same team will continue to "lead" this company nothing changes. And, in my opinion, at the shareholders meeting they should vote if this team could be kept in place and not the merger with the Red Back.
Have a good week-end,
Piedone