Merger - media coverage, page-7

MTS probably do not want much more debt (either will their lenders) and probably do not want to issue hundreds of millions of dollars worth of new equity to pay for HHT and the pick of Masters stores. So I think a majority stake in a new entity is not a bad idea. Given the huge profits made by private equity on the Dick Smith deal any involvment with a new entity should see MTS shares skyrocket should a deal be done. If my memory serves me correctly when we got into Auto and Mitre 10 we started off with a majority and bought the rest later. If the new entity does very well and MTS shares are at highs no doubt new equity can then be issued (at way higher price levels) to buy the remainder - probably stipulated in the deal.
Stepping back we would still be the small player in a duopoly - but still the combined Mitre10/HHT plus the cream of Masters could be a licence to print money just as Bunnings is for WES.
For the right deal it would be worth forgoing another year of dividends if MTS needs to pour some money into it. We would more than make up in terms of share price rise. We would probably want 70 - 75% of the new entity which would mean that we would need to raise some funds from a combination of sources.
If these rumors gather traction I think that gap in the SP will be closed sooner than later.
If this deal is handled right it could be a company maker. Private equity however will be happy to stooge MTS just as it would not blink an eye stoggeing shareholders for a cent. So MTS better have the best legal advice.
Cheers,M