RE: RE: Press Release re: Nord's HRG offer The comparisons of Nord vs HRG have been done already ad nauseum. I am trying to keep it as brief as possible in order to make my point:
Nord: 4.80 recent quote 359 M shares, of which 10.9% are float for 1.72 B $ CAP
HRG: Now 1.43 recent quote, 840M shares float approx 1/4 of that, say 210 M sahers, for a cap of 1.18 B $
At present the Mordy offer would translate into either swapping 3.5 shares of HRG for each NORD share for a present value of 1.37 per HRG share.
The other option allows for 1.40 cash per HRG share, now approx 1.42 or 1.43 per share, thus already a 5c premium over the Mordy offer.
Chris suggested to seek to improve the share swap to 3.0 shares of HRG from 3.5 which would value HRG as 1.60 per share.
2011 net profit of HRG was 170.4 or 20c per share, 1st Q of 2012 was 57.6 M or 7c for the Q vs 37.3 M for 1st Q of 2011 (5c/share). Annualised that would be 28c net profit or at 1.40 a PE of 5.0
2011 net profit of NORD was 251 M $, 1st Q of 2012 was 60 M (essentially all contributed by HRG) .
Without going into any more details it becomes clear that HRG is considerably superior to NORD. Even when looked at as an even comparison, 359 M shares of Nord would be then equivalent to 840 M shares of HRG or a ratio of 1: 2.34 or say 4.80/2.34 = 2.05 for each HRG share, plus the cash & equivalent value of 320 M $ (including 150 M $ lent to NORD by HRG) for another 38 c per share plus 50% of Prognoz, say another 25 c or so for a total value of 2.68 $ per HRG share, and NOT 1.40.
You and I know though that Mordy would NEVER go for that, so we are kind of stuck. Either accept something totally inferior or dig our heels in. What's Your thought on this?
I have been terribly disappointed by Chris latest interpretation which suggests that he could be satisfied with an HRG valuation of 1.60 for a 1:3 swap arrangement. Why would I want to swap one terribly undervalued Mordashov controlled company stock for another one equally controlled by him, the second richest man in Russia, worth about 20 + Bill $, and helping him that way to make another Bill $ or so to our detriment.
The key question we have to ask ourselves is: What other choices do we have, considering our toothless
SEC for the TSX, no less. And Mordy knows that so he plays them like the first fiddle and he may well get away with it yet again.
Comments please,
My 2c worth, Wolf E