Why the GXY share price should rise tomorrow, page-289

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asb83

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24/04/19

13:00

Post #: 38252029
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Originally posted by yanlin ↑

I just can't help but think that the numbers are being run over GXY as I type this post. Just have a look at the position of some of the potential "predators" like FMG.
Consider this:
* FMG is at 3-year highs at around A$7.70/share
* FMG has US$1.1b cash in the bank as at 31 March 19 (net debt of US$2.9b)
* FMG generates circa US$6b p.a. of free cash flow
* FMG could offer a 2 for 1 scrip offer valuing GXY at circa A$3.85 per share (A$1.57b) and not even register a blip on their cash or debt position
* FMG could issue 203.77m shares to GXY holder which would represent 6.6% of their current issued capital and bolt on a growth business to their IO business without breaking stride
* FMG would have access to A$400m cash within GXY, so the true cost to FMG would be A$1.1b in "paper money".

I am saying: it is not a case of "if", but "when"?

These opportunities don't come around too often and FMG is not one to let too many opportunities pass them by.

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Sounds like you're getting desperate now saying that it's only a matter of "when" there is a takeover. If this isn't ramping then I don't know what is.

Why would a company offer a 100% premium? You'd be lucky to get a 20-30% for a takeover offer, which still values GXY at well above underlying fundamental value. FMG wouldn't even sniff at GXY. FMG is in the business of generating shareholder value. GXY is making pipsqueak money from its current operations, with no certainty that it will even be generating a profit in future quarters, so acquiring GXY would be dilutive to FMG shareholders.

GXY Price at posting: $1.55 Sentiment: Hold Disclosure: Not Held
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0 Great analysis

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Why the GXY share price should rise tomorrow, page-289

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