Incitec Pivot Ltd T.IPL

RE:RE:RE:RE:Net book value

[Beckysboss]

Fantome
In my experience..looking at book value is not particularly useful in determining areasonable SP or a takeover price..your post clearly demonstrates this...

If it is in fact a private equity firm that is making the offer (who knows for sure at this point in time except the bidder and IPL mgt)...they would use different measures to come to an offer price since the deal would most likely be a leveraged buyout...they would look at..

1....their cost of capital

2....dividend return based on the buyout price

3...size of risk premium

4...some estimate of the market price of the underlying assets if they choose to sell off parts of the company
None of these have anything to do with book value or P/E ratios

[/quote wrote:

 So what is your experience in takeout values of pipeline or midstream assets? Do you have any.  I do.

 Dividend means nothing,  cash flow does,  asset value (which is reflected in book value) does.  Where does BV, P/E, cash flow multiples come in, well in comparable assets which is what I gave you.  Enbridge and Pembina, it always matters where those assets are valued in the market. IPL's ratios are stretched in here.  Ignore that at your own peril. 

You also want to be very careful assuming what is written in the media ($30 cash offer put on the table weeks ago) is correct,  the media have no responsability to the regulators and can throw anything they want out there wouldn't be the first time,  remember the G&M told you in that article this information was the "word" in financial circles (aka rumours)  nothing more. 

 Then IPL comes back and said yes we received an offer but there are no negotiations,  no deal is under review. The corporation is responsible for material information being released in a timely manner.  The regulator holds them responsible.  You can bet the regulator asked them to comment to clear up the situation, thus the halt on Friday followed by a news release.  Rumours in financial circles are an every day event. 

Just suggesting some caution jumping to conclusions that there any facts supporting the $30 offer,  all you know is some sort of offer was made and rejected by IPL.  Lots of motivated players in financial circles would like that $30 number out there for self serving reasons.

From the G&M:

The word in financial circles is that Inter received a cash offer, but the company turned down the approach. According to sources familiar with the situation, a “credible” bidder approached the company with a $30-a-share offer in recent weeks and it was not received enthusiastically. The identity of the bidder was not immediately known.