Fernando MonteiroPremier Bids $4.10 for Just Group
June 3rd 2008 15:38
Solomon Lew through his company, Premier Investments, is bidding a medium amount of $4.10 for Just Group. The press is awash in indignation since an independent expert valued the group higher. But the undeniable fact is that the share price of Just is today $3.81, below the Premier’s offer and this is being rejected as too low.
It’s a fact that some other businesses around were sold at higher than 10 times current earnings, but who can condemn Lew trying to bargain? If the economy slows down as it is feared, retail will be the first to take the hit. It must be said though, that Premier’s stock being offered is illiquid and that if shareholders accepted it and then tried to sell, its price would dive.
This takeover just makes me think again on what is the price for a company: is it the market price? Is it some other price? And then, why?
If a company is capitalised on a certain figure in the stock market, why then would their management ask for more? I mean, if you would buy a share of Just Group today you would pay $3.81. Why then asking more than that if you want to buy the whole company? It doesn’t stack up.
The share market brims with people who believe to death in the Efficient Market Hypothesis and this specifies that the market price always reflects all the information available. Wouldn’t it mean that, being the price of the totality of the company greater than the current share price, then the company has some value that the market didn’t appraise? How funny!
It’s a fact that some other businesses around were sold at higher than 10 times current earnings, but who can condemn Lew trying to bargain? If the economy slows down as it is feared, retail will be the first to take the hit. It must be said though, that Premier’s stock being offered is illiquid and that if shareholders accepted it and then tried to sell, its price would dive.
This takeover just makes me think again on what is the price for a company: is it the market price? Is it some other price? And then, why?
If a company is capitalised on a certain figure in the stock market, why then would their management ask for more? I mean, if you would buy a share of Just Group today you would pay $3.81. Why then asking more than that if you want to buy the whole company? It doesn’t stack up.
The share market brims with people who believe to death in the Efficient Market Hypothesis and this specifies that the market price always reflects all the information available. Wouldn’t it mean that, being the price of the totality of the company greater than the current share price, then the company has some value that the market didn’t appraise? How funny!
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