Mr. Forthright:
I did not suggest exactly that BII is a good take-over target per se. My point essentially was, and others share this view as well, that it would be an ideal vehicle for a larger retail competitor to come north (or even domestically) because it has already established itself through the news and other venues. In other words, it is already known within the investing community and even among the larger population. (based on what I have heard over the past couple of months) Also, because of its current valuation, it is indeed dirt cheap to acquire compared to its US rivals, and if less than 10% of shares are held by insiders, takeover would be relatively easy. Who's really going to block the effort? Brokerage houses that are less than supportive as it is? That's a laugh!
In the final analysis, a competitor may choose to establish its own site regardless. BII is probably not an attractive acquisition for every competitor out there, but it may be for some who have bigger plans of there own. If the technology platform etc. is also superior at BII, this would also certainly peak the interest of other parties looking to steal a deal. On the other hand, it may be an unattractive option due to its financial losses and slim margins at present, and its inability to turn these numbers around so far may cause many competitors to think twice about acquisition. I see both pros and cons in this possibility of takeover, and the fact that consolidation will occur in this industry eventually, only buttresses my beliefs in these kinds of possibilities. I am not suggesting it will occur soon if at all. I was merely discussing the scenario.
As for the share price prediction I put forward, you may disagree, but I do feel $10-$15 CDN represents fair value for this company at present. Even Yorkton has expressed the same view point, however, I do not share the enthusiasm that $30-$40 CDN is within range as some people do should a merger deal be announced. Even though it would still be cheap compared to US competitors, it is probably way to high for a company that is still very much behind the competition and I don't feel others may be willing to offer share prices at these levels for the reasons I outlined above. (ie: slim margins, poor revenues etc.)
P.S. You must keep in mind that it is much easier for a retail competitor to come in and buy someone else's established operation up versus starting from scratch yourself. (This is not easy) It is already occured in this sector with Compaq's purchase (I believe) of an online auction house. As consolidation becomes a reality in this sector, only the strong will survive. Time will tell if BII can stand on its own or find itself out of business/merged into another company. |
