18 November 2008
column
Johannesburg — WITH price:earnings ratios of some big companies on the JSE at about six, and dividend yields at similar levels, it had to happen. At some point, someone was going to pounce.
Tiger Brands' unsolicited offer for AVI means merger and acquisition season is now open.
The premium is generous, and it values the company at its highs from earlier this year, so that box is firmly ticked.
The two companies are compatible in orientation and geography, so tick that box too. Although they are both fast-moving consumer goods companies, how big the cost savings will be is not yet clear.
But you imagine there will be some, so tick that box too.
The big problem is the competition authorities. Tiger argues the overlap is surprisingly small if you look at it product by product rather than on a broader product category.
But even if this is true, you can't help feeling that the competition authorities will wonder about Tiger's bona fides considering it already has two major strikes against it.
It's great to see companies are seeing value; but seeing value and achieving it are different things.
The Bottom Line is Edited By Edward West
Be the first to Write a Comment!
Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
