takeover talk

I'm interested in the sudden change of tone on the takeover.

As I said, there was discussion ad nauseum on the topic back in February.

Have the Directors changed their view, or were they always headed down this route but kept it quiet?

The following will miss posts out, so if you're concerned, go back and look at the thread.

It's worth noting that the SP, has not appreciated significantly since February. If we leave out the recent drop and assume an SP of $1.80, it's only increased from say $0.90 since the announcement of the 100MT DSO.

The "sudden change" is interesting, or have the guys on this forum been sold for fools by a few key people???

How long have FMG discussions been happening????

See posts below. Head back to the discussion: "Why".

BUSH

My original post:

"I'd like to throw a slight variation in on the Incorporator.

FMG don't yet have the cash-flow, but they do have access to funding potentially.

I struggle to see a model being worked up where the ore is sold at the mine gate, or one where third party access is developed.

UMC is a small company. That means it doesn't have the scale economies to leverage down contractor rates which means a higher cost of production.

If contractors not used, then there are the issues getting access to plant and equipment: tyres the big one at the moment. Smaller company means higher plant costs means higher costs of production again.

Therefore, what I am saying is that it would make sense for one of the big players to come in and take out UMC. Which one?

One would think a Rio or BHP are bigger and slower to move. They're caught up with each other at the moment.

That leaves FMG or, as FM has alluded to Hancock. Hancock working on development of Roy Hill.

FMG appears perfectly suited. Can blend the ore with its lower grade material or park it for later when deposits further south open up. Potentially more nimble because younger company. Access to funds. Able to move more quickly???

Which swings in the bauxite that I keep harping about. Bauxite/ alumina the second generation commodity as Rio and Kloppers also like to note.

UMC gives FMG both in one go at a big discount, even at $6, if FM and Tony's valuations are on the money.

IMO, the issue is one of timing. If the three players, leaving Hancock out of the mix, are to be factored in, which one moves first?

The Board obviously sees the potential for a move as an issue, given the GM coming up. Would FMG be prepared to move before a JORC?

BUSH"

Then Bungy:

"Totally agree Showman.

BushBasher

The point I'm attempting to get across is director mindset, attitude if you wish. We only need to look at recent history to see that some directors of public listed companies sold their shareholders short by accepting takeover bids way short of the potential value. IMO, some directors are only in the business so as to dress-up the coy for a takeover. In fact, it would not surprise me that in the majority of these cases the directors never did have any intention of progressing the business beyond the exploration phase.

It would be naive for anyone to suggest that the UMC board have not already considered the pros and cons of a takeover. However, should at time they consider this to be a priority, IMO the chances are it will be a recipe for disaster. Indeed the directors would have lost their way.

As we all know, everything has a price and if the price is right, then it's a done deal.....but there is always a time and a place for everything and the place right now for the UMC board is to think of building not selling."

Me:

"So throwing it back to you Tony?

The Pilbara. Dominated by the two majors.

History of the industry being one of consolidation.

Stepping back from your position as interested shareholder.

How do you honestly see the UMC Holding Company play rolling out: if you were an outsider looking in: not as an insider looking out?

Timing, who and how and on the balance of probabilities?

BUSH"

Showman:

"BB.... my honest opinion?

Do the deal with BHP... but not without a nonbinding MOU with FMG. when....soon as a Jorc of 100mt+ of hign grade DSO is announced.

Can't say more than that.... I have been harping on about it for some time.....

All IMO and DYOR.

Chers, Tony."