How Does This Company Not Get Bought Out?At the time of the Rye Patch acquisition, I commented on this board that I thought that ALO would become a bigger acquisition target as a result of combining a lot of ounces in the ground in one cheaply valued company. Now this larger company’s value has nearly dropped to the values of each of the 2 separate pre-merger companies, I am assuming that buying out ALO would be extremely attractive to a number of mid-tier producers at this share price.
I came into ALO as a Rye Patch shareholder, and I was hoping that ALO management would prove to be superior to what I had experienced before. I’m starting to think that this is more of the same. I think that the assets are what attracts us to owning the shares, not the management. But to have a successful company it takes both.
The beauty of capitalism is that the market almost always finds a way to get that attractive combination of good management and good assets. It appears that this first acquisition (ALO buying RPM) fell short. Maybe the next acquisition will get it done. Or maybe it will take a third and final acquisition. I wouldn’t rule that out. The trouble is, the premium paid to the shareholders getting bought out doesn’t last more than a few weeks in the current depressed market. We need to see a rebound in PM prices, and then even current management will seem like geniuses.