pie discussion, page-18

Zehav,

These are my thoughts, and people can consider them, or dismiss them. They aren't downramping in nature, but just highlight a possibility whether it is acceptable or not.

Put yourself in Telstra's shoes.

TLS can either pay the tens of millions of dollars that shareholders are expecting in revenue from a rollout, as well as paying ongoing maintenance, servicing etc.

OR

TLS can buy the whole company for the current market capitalization of $20m + 30-50%. Even with paying capital costs for a rollout, I would expect TLS to come out ahead.

Under normal circumstances, a hostile takeover attempt might be shunned by shareholders. However, when PIE only has one major deal that they are working towards, it is the potential client (Telstra) that is in the driving seat in regards to whether a takeover will be successful or not.

Or in other words, if TLS says "We are not happy with the terms of a deal, and the only business we will do is to buy PIE outright", can shareholders really afford to say "No, we want 10c a shares"?


Reasons why a takeover is a possibility

1. The above
2. CEO resigning, with the only "Thank You" coming a couple of days later in the Directors report. An afterthought?
3. More ex TLS directors appearing on PIE's board
4. PIE's sudden move to Sydney. In 2011, it is quite common for a CEO not to be based at the Head Office. Location certainly doesn't swing matters as to whether a CEO should be removed or not.
5. Marble Bar averaging down substantially to 1.6c.


I am considering buying just for a 30-50% profit (note sentiment changed to "buy", but at no more than 1.7c)