Mike, I think we see here one of the pitfalls of a controlling owner.
As I pointed out earlier today, an acquisition for stock would have been less terrible. However, the big holder's interests would have been diluted significantly.
To re-emphasize one point, NH at $10 was not good enough for Fiat to quickly buy up its $250 million authorization last Fall and Winter, for its own account. However, they have now decided that 3 times the CSE low in cash is now a good idea for all NH shareholders, including them.
If you take, as I do, last year's lows on both stocks, traded at for a very long time as the proper value relationship -- roughly 2 to 1, CSE/NH (or the all time highs which have a similar relationship),
paying 3 to 1 in a $4B deal now in effect pays $1.3B or nearly $9 per
current NH share over fair value. That is not that much below the current equity of NH!!
Fiat mgmt should have read that study on synergies versus the price paid that we were recently discussing.
Mike, there is no way that you could view this as a value stock now.
I am just glad that you had the opportunity to get out at a decent price today, if you have a policy of getting out of stocks when the company nature changes materially. |
