The acquisition doesn't stack well in terms of earnings and acquisition price. Remember any acquisition will have to be at a 20% premium to get it over the line.
The acquisition does not make sense at $15, nevermind a 20% premium to $18.
Management need to deliver on the RoE targets, this has been a dog of a company for too long. (good underlying but cyclical business, but run by fat cats with no skin in the game).
Wesfarmers has been very well run. For them to take on Orica, they need to start the bidding at a much lower price. There is some serious fat, (as well as as asset write downs) required. This will all take work. Much easier when the share price is much lower.
ORI Price at posting:
$14.95 Sentiment: None Disclosure: Not Held
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