RE: Dont get it7 Nov 2021 23:15
Hi RTR,
If you have ever been involved in business - look for the added value - not just cash - If CNE acq'n lifted HBR to the FTSE 100 whats' that value $500 MKT cap as it becomes a pension fund add in. Quote my points earlier this month:
without repeating many of my posts, i've summarised IMO the major factors to be considered if HBR acquired CNE:
1. It's a 'Unique' Opportunity to acquire a 'Discounted' Mid Cap Oiler, which could be a huge cash shell if GOI pay up. Currently CNE have Net Assets $810m or £1.20, add $1.06bn cash, NAV £2.75 of which £1bn is - Cash £2/share. This opportunity does NOT come around very often with POO being +$80 and allows HBR (Mkt Cap £3.5bn) to use its Equity base - could swallow CNE in an all share deal, if CNE II's agreed. CNE size is just right £3/ bid for CNE £1.5bn = say 450m shares in HBR to be issued or 50% of Shares in issue - perfect accretive deal. IMO HBR Book Value goes from $1.7bn to $3.5bn Simples.
2. CNE is Ripe for a Takeover (Unique Oppo) , the CNE BOD would need to develop a 'Growth' model very quickly to defend a takeover. As stated, it is a cash Shell and HBR would put forward a stronger Growth argument to CNE-II's IMO.
3. CNE cash would considerably strengthen HBR Balance sheet co, gearing would fall by 80% and the $1.3bn cash would allow gearing up of +2x2.5 for acquisitions. HBR could be 'Finally Free of Restrictive debt' and be able to pursue far wider opportunities - Which is a HUGE ATTRACTION. Take control bank off the banks... i.e greater determination of core operating capabilities. It could accelerate HBR expansion plans by 2-3 years.
4. Global Oil majors are throwing off small to medium sized assets like confetti, now (IF EVER) is the time to have cash and cherry pick opportunities - it is now. M&A activity is at a high at the moment.
5. Acquiring CNE would get HBR into the FTSE 100, which should increase the SP if POO holds course and allow for further strengthening of the business.
6. The TO would accelerate HBR ability to pay dividends, define a more solid reliable distribution stream, which would entice CNE II's to support a bid, stronger more robust growth story.
All IMO DYOR GLA
7. The extra cash would help HBR become greener quicker by 2-3 years
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