Ann: FAL - SI-NRW JV Preferred Respondent, page-124

Motoracebeerguy wrote, “. . . watch this, someone will weigh in with an offer now I have shot my gob off”. Post hoc ergo propter hoc – his words seeped out and today BYL's SP went from 65c to 75c. The buy-sell scenario at COB today was:
............. Buy ...................... Sell
1 ..... 24,653 .. 0.075 <---> 0.087 .... 20,000 ... 1
1 ..... 41,546 .. 0.074 <---> 0.095 ...... 5,000 ... 1
1 ..... 49,635 .. 0.066 <---> 0.099 .... 33,300 ... 1
2 ... 110,000 .. 0.060 <---> 0.100 .. 100,000 ... 1
1 ... 178,571 .. 0.056 <---> 0.105 .... 14,965 ... 2
1 ..... 32,000 .. 0.040
1 ... 200,000 .. 0.010

On Tuesday I ordered 166,000 at 66c. The 49,635 listed above is what remains of the buy order, so I got 116,365. I'll just sit on them, and see what happens.

Ghurka and Ryrie12 commented about debt. Debt is a factor that one uses when calculating a possible acquisition price – it simply lowers the price. It is not a go-no-go issue.

Ryrie12 and Robjhunt both suggested that NWH would not consider acquiring BYL, because it was a poor-quaility company. On that basis, NWH would not have acquired Hughes Drilling, which had gone into administration. BYL's poor performance is a reflection of its poor management, not the sector, or more to the point, the subsector in which BYL can be placed. If management had not been so bad, one would be less inclined to buy BYL, because it would not sell for a song. Actually, BYL was substantially undone by one large-for-BYL $22m cock-up that wrecked FY15 and FY16.
........ FY08 ... 09 .. 10 ... 11 ... 12 ... 13 ... 14 ... 15 .... 16
EPS .. -1.4 .. 6.2 .. 4.6 .. 0.1 .. 8.6 .. 9.3 .. 8.8 .. 2.4 .. -14.1
DPS ... 2.0 .. 1.5 .. 1.5 .. 0.5 .. 2.8 .. 3.0 .. 3.0 .. 1.2 .. 0.0

BYL made a small profit in H1FY17. The positive results in the better years (2009 until 2014) should have been better too, because BYL had overhead expenses that a thriftier management could easily have pared. NWH management would most likely avoid similar cock-ups (caused by under quoting), and they would extract a better margin on the revenue through disciplined bidding and a proclivity to be thriftier than BYL's management has been.

I am, as a rule, not keen on growth by acquisition, but they can at times make sense. I do not recall reading any negative comment on the acquisition of Hughes Drilling earlier, and Golding recently, and I see tossing BYL into the same pot as a useful fillip to the Golding acquisition, because BYL can easily be merged into NWH's expanded-by-Golding operation. If the resultant benefit is small, it would be commensurate with the price tag. Some points are as follows:

1. Golding's Urban division does not mirror anything that NWH has, but it mirrors what BYL does in WA and the NT, which would give NWH a strong urban-development presence in WA, NT and QLD, which could be managed by Dan Draper, GM of Urban division, Golding.
2. BYL's mining services work is similar in style to what NWH has been doing for years, so it can simply be pulled under existing NWH management, and use NWH's existing facilities.
3. BYL's civil engineering is similar to that of NWH – both not as good as Golding's ability, which includes superior bridge-building qualifications. BYL's business Civil business can be managed by NWH.
4. BYL's head office can be closed, and the expense thus avoided. BYL's workshop at Maddington (a South-Eastern suburb of Perth) would either be useful to NWH, or it too can be closed, and work moved to current NWH workshop facilities.

A company does not have to be in good nick to become a potential target, it just has to be able to be profitably absorbed into the acquiring company's operation, as was the case with Hughes Drilling, which had gone into administration.

I think I have done this topic to death, and it anyhow has aspects that make it more suitable for the BYL subforum than the NWH subforum.