What do Directors often recommend in the event of a takeover offer?, page-81

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Paul12

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03/04/18

10:55

Post #: 32179738
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Originally posted by Primate ↑

You all seem to be forgetting, that the market value for a share of AVB was about $0.07. That's how much money the majority of market participants thought it was worth. It doesn't matter if it was $0.25 8 years ago. It doesn't matter if it has the potential to be $0.25 in a couple of years time. Its worth in the market right now, was $0.07.

So yes, somebody comes and says to the board "I'll pay your shareholders $0.16 per share but only with your recommendation" It would be a negligent board that refused such an offer.

Consider my house I bought as a fixer upper. Before the GFC it might have been worth $500K. But the market has changed and now people are only prepared to pay $150K in my suburb. Sure with a lot of renovation I might be able to get $500K for it with a lot of work in 3 years time, it has that potential. If someone offered you $300K for it right now, what would you do?

Personally, I'd take the money, as it is well over the current market rate, and then re-invest it in similar opportunities. You may not, but the economically rational thing to do, as the AVB directors have done, is to take the offer!

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So, if you had neighbours buy either side of your house and turn their yards/houses into tips to halve the value of your house so that no-one was interested in buying, and they then made you an offer of the original value of your house, would you then be "happy" to accept the offer and put it down to market forces? Would you say you got double your value?

AVB Price at posting: 15.5¢ Sentiment: Hold Disclosure: Held
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10 Great analysis

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What do Directors often recommend in the event of a takeover offer?, page-81

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