TGR (ASX) Ann: Receipt of Non Binding Indicative Proposal

Originally posted by dabozza: ↑

Doesn't seem any reason - beyond anchor bias- as to why the bid should be at $5.20 or all time highs? That's just a number. Not sure if management would see that as their fair value for the business today.

Reality is they see there is a lot of value in prawns, which are expected to be 50% of operating profit by 2030. They see a lot of value in new industries like seaweed, the third vertical starting up now.

Conservatively Tassal is expected to generate a 14% CAGR on FCF growth until 2030. Management doesn't believe that's worth a 20x multiple on FCF and 14x multiple on earnings today. And to be frank, I agree. There are slower growers out there trading on higher multiples, just look around.

Unfortunately, Australians don't value primary businesses. They see them as risky and cyclical, and so generally they fail in the listed markets or get taken over by private equity. So often the question is, would business X do better in private hands where they can have a longer term focus? Reality is, often they would do better off the ASX boards.

It will be interesting to see if the new ASX agribusiness changes anything. I have my doubts, because super funds aren't really investing much in the markets or privately. That to me would be the expected home for a lot of this. Instead, they're sold to Canadian pension funds, large companies, etc. This is not just an issue for aquaculture, but a lot of long duration assets.

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I want to pick your brain.

I am trying to understand what management of a business like Tassel should do to avoid an offer like this. Should they have raised more in 2019 and anchored the dividend for the 4 years journey they were on? Should they have rather borrowed more and fixed the term longer and lower?

Did the Huon mess create headwinds for TGR?

My frustration is that I end up being sold off just after the extra primary risks are going. They invested in prawns and have succeeded in integrating the businesses. Had they failed we would have been sold out at under $2.00. Now that they can see cash flow that will repay borrowings and create value for shareholders they are now a takeover target.

I can see a deal being done I and as many as want to point out that its not a great deal will get flooded by short term measurement and off Cooke will trundle with the buried gold. They have said we are being paid a premium , they have pointed out interest rate risk - what they never point out is why they would want all this hassle unless it was to make a lot of money.

So why would I continue to invest in Australian Agri stocks - franking credits are not enough. None of our banks get takeover offers - There are way better banks from an investment point of view overseas - cheaper, not as high pay-out but slow growth...

I am starting to feel that its not worthwhile investing in Agri in Australia. You never get to the good days. Webster and the water cotton business Tandou - all delisted and taken over. There are a lot more.