as requested by ozzi,
FYI i am an bachelors accounting student and got 98% in business combinations, however, this is my opinion only! DYOR
A bargain purchase involves assets acquired for less than fair market value. In a bargain purchase business combination, a corporate entity is acquired by another for an amount that is less than the fair market value of its net assets. Current accounting rules for business combinations require the acquirer to record the difference between fair value of the acquired net assets and the purchase price as a gain on its income statement due to negative goodwill.
https://www.investopedia.com/terms/b/bargain-purchase.asp
A Deferred Tax Asset is an asset on a company’s balance sheet that may be used to reduce taxable income.
https://www.investopedia.com/video/play/deferred-tax-asset/
AGO deferred tax assets can be found on the 2017 annual report page numbers 62 & 63
http://www.atlasiron.com.au/site/PDF/8211_1/2017AnnualReporttoshareholders
Don’t assume the media is correct about $500M in deferred taxes, please look for yourself.
What is the point of these links? See below….
According to Australian accounting standards, any bid under 9 cents a share for AGO will result in the acquiring company getting a barging purchase when they write back deferred tax assets!
The 9 cent value is excluding the additional benefits of port access and mining rights to known Magnetite and Lithium deposits available to the acquiring company.
CE has stated to the AFR "So I need the people, I need that wharf space and I need to build a big negative pressure shed to make sure we don't have any environmental issues. They are my first couple of things I want to get done."
https://www.copyright link/business/elliso...-grumbling-atlas-shareholders-20180526-h10l7d
FMG CEO Elizabeth Gaines said on the 3rd June that the company is working towards finding other commodities to mine.
http://www.mining.com/worlds-no-4-iron-ore-miner-wants-diversify-portfolio/
It seems there is a lot up for grabs. Port access, tax credits, magnetite, lithium and potentially copper and gold. All at a bargain if purchased under 9 cents a share!
If the winning bidder starts to produce 68%fe from the Ridley Magnetite Project, the results could possibly see the winning bidder in strong competition with BHP and RIO.
Will BHP and RIO see this as a threat and put their own bid in as some have said?
Will FMG announce a serious bid?
Will CE lose his second takeover in 12 months because he couldn’t afford a
fair price for a company that is in palliative care or will he put his money where his mouth is?
The current offer for AGO is a bargain and will continue to be a bargain purchase until an offer is made over 9 cents a share.
All values taken from 2017 annual report, page numbers referenced
http://www.atlasiron.com.au/site/PDF/8211_1/2017AnnualReporttoshareholders
Share capital pg.67 9,260,788,000 shares
Total equity pg.42 $322,248,000
DTA pg.62-63 $508,820,000
Equity inc DTA: $322,248,000 + $508,820,000= $831,068,000
Fair value per share = (Equity inc DTA) $831,068,000 / (Share capital) 9,260,788,000 shares
=$0.089 per share when DTA included in equity
without DTA = (equity) $322,248,000/9,260,788,000 shares
=$0.035 per share
If a takeover happens then DTA will be recorded on the combination, therefore, a fair offer should include DTA.
