I am new to the ASX. I am not aware of the history or the frequency of companies going private and so I wonder why this issue of privatisation keeps popping up. In my sphere, companies go for dual listings more than delisting. I hope someone can shed light of the benefits of delisting, especially in FLC’s case.
Allow me to share why I think FLC will stay public.
(1) it needs the currency to acquire more companies. Shares are issued for acquisitions as a combination of part shares and cash. Whether ASX listed are preferred is debatable. Most target companies would prefer listing in major markets like London or New York exchanges.
(2) it needs a multiple for its earnings. Rich people know about leverage, a multiple of return is worth more than effort put in. For eg, a dollar of earnings is not worth a dollar. If the price earnings ratio is 10, a dollar’s worth of earnings is worth $10. Private companies don’t have that benefit of the effects of having the multiple at its disposal. Same principle behind using leverage (debt) even though they have cash. But that’s another story for another day.
I hope this hopes to explain explain the ways of the rich.
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