Premium was already built into the share price ever since they picked up their first parcel.
We're talking about a company worth $700m that is yet to make a profit.
REA is going to need to get this acquisition earning circa 70m a year just to get a 10% p.a return on investment, this is considerably lower than the 40% returns that they have been able to generate on the current equity. There is going to be a lot of pressure on them to get this right otherwise they've just destroy a lot of shareholder value.
IPP Price at posting:
$3.84 Sentiment: None Disclosure: Not Held
