takeover offer 90 cents, page-16

Fedexpress, like i said to you in a post 3 or 4 months ago, good companies with strong management, lean balance sheets and strong market positions are ALWAYS a good buy. The only thing the share price is inidicative of is how a company is going in any one year - a share price rarely reflects where a given company is going to be in 3-5 years time. With regards to Rinker and PCG, they've both suffered short-term setbacks after years of fantastic performance and then a TRADE buyer (rather than a private equity group looking to make a quick buck) have stepped in and made opportunistic offers to buy them out. If i was to forecast where Rinker and PCG would be in 3-5 years, my assessment is that they both would've made fantastic returns to shareholders that would be far in excess of the quick 30% premium you get when a company gets taken over.

I'd be terribly disappointed if PCG got bought out now. What i don't think people appreciate is why CAPE have made this bid; PCG are CAPE's main competitor for the huge amount of work that is coming onstream in the Middle East over the next 2-3 years, and CAPE recognise that PCG are more likely to win the work than CAPE are. PCG have routinely beat out CAPE on projects they competed for, such as Train V and parts of the Caspian work, and CAPE realise that buying out PCG would guarantee them huge volumes of work and opportunities for expansion. As i've already said, it's very similar to Rinker and Cemex - Cemex is a far inferior company to Rinker on most metrics and Rinker has better potential over the next 3-5 years, so Cemex as a trade buyer look to make an acquisition that would hugely enhance their prospects over the medium-to-long term.

I just hope PCG management tell CAPE exactly where to shove their offer like Rinker did to Cemex.