FBU 0.77% $2.61 fletcher building limited

Strange announcement. $40m asset sale in the context of a $9bn...

  1. 16,539 Posts.
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    Strange announcement.

    $40m asset sale in the context of a $9bn asset base... not even a rounding error.

    That said, there are a few takeaways that one could make:

    1. Selling an asset at 57% of its carrying value is somewhat of a comment about the shareholder value-diluting empire building that a succession of FBU executives have undertaken over the past 15 years, spurred on by dirt cheap cost of capital.

    2. Why invest in, let alone operate and retain, a business that represents a mere 0.045% of your asset base?

    3. I suspect FBU's portfolio contains many of these sorts of illogical, sub-scale business units which contribute negligible earnings and therefor are probably just a drain on management time and focus.

    4. In the light of the above comments, if this portends something of a root-and-branch, strategic review of the company's asset base, it could be the start of a much-needed asset rationalisation phase which has the potential to restore part of the shareholder value that has been destroyed. But it is tantamount to unscrambling the egg, so I don't think one should hold one's breath.
 
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