amandasmsf,I hear what you are saying, however no business...

amandasmsf,

I hear what you are saying, however no business spends $1m and has no benefit especially the size of ECL's electrical business. It will say on rent alone let alone any synergies from plant management and supervisory structures. Hey, maybe that's why they have put it off or now! I believe the board will say there are no benefits but I think they are saying that from a conservative notion or they don't want to be held accountable to a savings number and EBITDA uplift.

I agree with you with respect to a commodity business not being valued at a higher multiple, but what you need to take into account is that the commodity business is not the driver of the EBITDA and that the Minto business is. If you look at the legend business, it sold for a 7.3 X multiple yet a great deal of that business was commodity and made up of multiple brands where as ECL is a little more structured in its brand.

If the owners of Legend believe that they can do a better job that the ECL board they will pay a higher multiple, I agree not an 8 X's but I still believe anywhere between a 6.5X to a 7X's. Also if there is competitive tension ie Ampcontrol and Legend interested it also pushes up the multiple. Don't forget Minto is a solid business with a deep economic moat. The capital cost to set up is great and its not a hugely growing industry so its not attractive to invest, the better option is to buy an existing business with a strong market presence such as Minto!

I don't believe what is going on at the board is impacting of the operational side of the business otherwise it would have already imploded. What it has actually done is grown and become more profitable. The goings on at the board level are only frustrating because it is only prolonging value accretion for shareholders.

I expect the half year results to be strong, especially now that the investment arm has stopped bleeding. I am actually hoping that the dividend is raised for the existing $0.06/share to $0.08/share as this is actually in line with the 60% of NPAT that the board stated some time ago.