re: Ann: OAK: RFG: Withdrawal of Takeover Off...
jhu,
I think that linking this recent takeover play to high profile private equity failures is a bit of a stretch. Need to face it, many of our largest companies are what they are because they grew through acquisition. Acquiring good assets at attractive prices to enhance the consolidated entity is a tried and proven method of building long term value. This is very different to buying a company, loading it with additional debt, tarting it up and flogging it back to the unsuspecting public coupled to ridiculous management contracts that allow you to maintain enough control as to continue to conceal the financial engineering for as long as possible. Two completely different things.
While some fear moving away from core business others recognise that diversification is necessary. Failure to diversify and you are completely at the mercy of a specific industry cycle. Diversification can help to smooth out the impacts of such cycles. It can also provide better growth opportunities and synergies.
I believe that the Oaks takeover would have been excellent for RFG longer term and added significant value for RFG shareholders. The fact that management failed to articulate the benefits and funding arrangements is a bit sad but in my opinion this doesn't in itself make it a bad deal or an opportunity that should not have been looked at.
RFG Price at posting:
$2.45 Sentiment: Buy Disclosure: Held
