TPI & TOX have been consistently linked for about 2 years. We'll...

TPI & TOX have been consistently linked for about 2 years. We'll wait and see, but it is interesting to note that TOX today did a volume of about 1.2M shares, which is the 2nd largest day of volume it's done in the last 12 months. TOX is usually a very tightly held stock so to see 1.2M shares change hands today on no news suggests something is going on, most likely a change in substantial holding but i suppose there's always the possibility that TPI are building a stake.

TPI have done their nuts on DMX seeing as they got in at $0.55 last year, which says something about TPI and their "grow at any cost" attitude in my opinion.

Also interesting to see that that the TPI offer for DMX is in shares only - if TPI were to make an offer for TOX i'd definitely prefer it be 100% cash seeing as i've never really liked the lack of organic growth that TPI has been able to generate and wouldn't want to be a long-term holder of their shares. TPI have made some bad strategic moves, such as taking out stakes in DMX and ARW, which have destroyed shareholder value, they carry a bucketload of goodwill on acquisitions on their balance sheet, and they're light on for cash (only had $105m as at 31/12/07) and credit is almost impossible to get, so i would absolutely hate to receive a scrip offer from TPI for TOX shares.

However, the major factor as to why i think it's unlikely that TPI will take out TOX in the short term is that TPI would get no acquisition accretion from such a transaction. At today's close, TPI is trading on a forward P/E of about 14.4 and TOX is on about 13.5, which means that if TPI were to make a bid for TOX with the standard ~30% takeover premium, they'd be paying something like 17.5x FY08 NPAT, which would have the effect of destroying shareholder value for TPI (at least in the short term).