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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Harold S. who wrote (26928)8/3/1998 4:02:00 PM
From: Robert Floyd  Read Replies (1) of 95453
 
My impressions of the TCMS acquisition:

Positive view...this acquisition will be accretive to earnings, it will diminish the dependency on GOM business, the synergy allows both companies to bid on projects they otherwise could not do alone, and many of the new jobs should exceed the 3-6 month duration that TCMS usually gets.

Negative view...they paid big bucks for a company with hardly any tangible assets, the margin for the line of work is typically lower than the fixed bids TCMS gets, the combined company will assume a lot of debt and will have little in the way of tangible equity, they will have too many fabrication yards between them (something will have to be closed).

Bottomline: a very risky, expensive acquisition with only potential payoff. In this market, they paid too much at the wrong time.
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