We are all adverse to LYC being taken over "Cheaply". However I believe if anyone attempts to take over LYC, it will be done for STRATEGIC RATIONALE not ECONOMIC RATIONAL. It may be a private company but it will be funded by very cheap government money. Japan has almost zero interest rates, the US are about 0.75%. and ECB are almost zero. Once they have made a decision to buy they would get it done uninhibited by economic rationale and fancy NPV models. This means a substantial premium would be paid to secure 100% control (and it would have to be 100%!). So what would they pay? Well my guess, and it is just a guess, is that they would be prepared to pay somewhere between A$2 - 3b. This translates into a price of A$0.28 - A$0.42. If we take a midpoint, the price would be A$0.35. Now this may look high by itself but comparing it to my LYC NPV calculation of A$0.53 puts it in a different perspective. Curiously A$0.35 is almost midway between the current Share Price of A$0.15 and the NPV of A$0.53 so it sort of feels about right. So this new corporate valuation technique of FOR ("feels about right") is the best I can do. Maybe somebody else has a better valuation methodology.
LYC Price at posting:
14.8¢ Sentiment: Hold Disclosure: Held
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