(27-12-2011, 10:34 PM)mrEngineer Wrote: (27-12-2011, 02:56 PM)Qiaofeng Wrote: Spend time and money, raise expectations on difficult and politically sensitive M&As and then fail------ destroy shareholder value, intrinsic value drops.
This is extremely common. Nothing to cry about. Even if the deal go thru successfully and 10 years down the road, the premium was realized to be not justifiable with a loss, people will come back and scold Magnus.
Shareholders or observers sometimes on sidelines think retrospectively or even sometimes prospectively that better work could have done or failures could have been prevented if this or that was done more properly. However, they do not realize that true full value maximization will never happen in the real world as nobody would want to offer or accept that kind of deal. I would rather respect management who executes, put in the hard work to try and if failed, pick up and go on to the next one.
If U read my post carefully, I am not criticising business aspects of the deal such as premium etc.
But, the large sum spent on advisory fees w/o ascertaining the political buy-in------ knowing that that is the stumbling block.
They did not have FIRB approval or the Treasury (Wayne Swan)support and it is a known fact that Australian politicians -- whose approval
is necessary to lift a 15 percent shareholder cap -- were very negative to the whole proposition.
So why spend $12m on it.
It is a bet I wished would work out----But, the day it was announced, I knew that was wishful thinking becos the odds were stacked steeply against success.
The point is not about crying over spilt milk.
The discussion is important and relevant becos SGX shareholders ( me vested) will want to know that the same mistakes are not repeated at LME, if SGX do make a bid. There is a lot of flux in the LME case and the biz proposition is not that straight forward. My hunch is that advisory fees would be much much higher in this scenario.
Some feel of the complexity------
By ownership there are 2 share classes.
By trading methods there are 3 types (Open outcry, electronic, telephone transactions)
Any change in ownership needs approval from members holding 75 % of ordinary shares.
Fees are kept low for its members who also own the business.
JP Morgan and GS, both owners and members have a huge say and are buying up shares in the run-up.
SGX forte under Magnus, is the electronic trading platform (REACH?). LME is the last bastion of the open outcry system where the big trades are done and there are huge historical sentiments (hence baggage) attached, by the Brits.
So altho I wanna buy more SGX, when prices dipped--- I am wary of the uncertainty associated.
That said, Magnus Bocker is a consummate deal maker hired becos of his track record (IMHO).
My 1cG