Typically takeovers are not a win-win outcome for both sets of...

Typically takeovers are not a win-win outcome for both sets of shareholders. So I ask myself would I rather be a TWD shareholder or an AIR shareholder if this proposal goes ahead?

I think I'd rather be the AIR shareholder and be able to sell at effectively 64 cents! This company has not been profitable for at least 9 years and has not generated positive operating cashflow for the last 6 years. It's a small player in a very competitive industry. AIR has net tangible assets of about $4.46m and its shareholders are being offered an implied value of more than $11m over and above the net tangible assets.

TWD might extract some savings on corporate costs, but AIR seems to be run somewhat economically already. I'm not sure what other synergies are on offer to TWD. TWD shareholders will see the share count of TWD rise by 16% without any obvious near term rise in earnings, a clear negative. AIR are now getting access to the IP and trademarks for zinc sunscreens from Advanced ZincTek (for $1.5m) but whether or not this transforms AIR's consumer division into a profitable one remains to be seen.

All in all I think this may prove to be a convenient transaction for our chairman who can consolidate his holdings into a larger and more liquid stock, but it does raise corporate governance issues.

I've trimmed my holding in TWD, don't own AIR and own a few ANO.