Today was a milestone for many reasons, but one of which is interesting...
At the end of the Dec half CNP had $158m cash on the balance sheet. Today, the market cap of CNP dropped to less than $150m. In theory at least, you could have bought the entire company for less than the amount of cash on the balance sheet. Everything else ($2.4bn of equity at the end of last year) would be free.
I appreciate the cash balance, equity, etc. would have changed and there is little chance of taking over the company for the current market cap, but it's an interesting situation to think about.
The lower the market cap goes, the more a buyout and breakup could become a possibility. Why bother injecting equity when you could buy the whole thing for less? That's probably the argument that the suitors used in negotiations with the company.
As another interesting illustration, Rio Tinto could currently buy the entire $24bn Centro 'empire' for 3 days of its cash flow. That's right, 3 days cashflow. (RIO cashflow for 6 months / 180 days to Jun 08 $8,860m or $49m per day). If they wanted to actually buy the company out of net earnings, it would take them only 5 days worth (RIO net earnings $6,914m for 6 months to Jun 08 or $38.4m per day).
Not sure what a miner would do with a global shopping centre empire but you get the idea of how low we have now gone.
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