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Strategies & Market Trends : Value Investing
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To: anializer who wrote (32874)11/26/2008 4:51:42 PM
From: Paul Senior  Read Replies (2) of 78753
 
ASH. Does seem odd, although...in this market so much is.

Hercules shareholders were fortunate to have received cash for most of their shares instead of ASH stock.

I'm not sure I've got this correctly, but here goes: ASH valued the Hercules deal at $2.4B. ASH spent their large cash balance and also incurred debt of $.7B to do the deal. With ASH stock down now, ASH enterprise value is maybe (market cap + net debt) approx. $.67B + $.7B = $1.37B. So the combo ASH + Hercules at $1.37B is worth about 1/2 of what Hercules itself was valued at earlier ($2.4B)?

Of course, value (strategic value, esp.) is in the eye of the beholder. Maybe ASH needed glasses. Or perhaps an operative word is "earlier": Everything was valued higher a few months earlier.

I'll consider ASH, but I'm skeptical of the business prospects, the synergies, the debt. "Small starter" would be the way for me too, if I do anything.
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