if deal not happen..., page-14

The 1 year anniversary...I remember the offer day well.

I did a quick back of the envelop calculation of the offer, watched the bid/offer before the open and realised I might get the chance to buy more well under the offer. Sure enough that is how it transpired. I can hardly fault those who saw an exit and sold. RNC was dead money for so long.

One thing I have been watching with interest is Yellow Brick Road. YBR has an EV of $100m, generates negative operating cashflow, and is in the process of building out its brand and store foot print (consuming capital). They are probably years away from paying a dividend and will likely need to raise additional capital as they continue their roll out. Yet RNC has positive operating cashflow, an established brand/footprint and is paying a dividend. Yet RNC has an EV of c.$35m.

I wonder how this difference in EV will resolve itself.

My guess is that YBR and RNC are more than just friends with a marketing agreement. IMO, with Macquarie's "help" YBR has already approached RNC to use its expensive stock to buy RNC's inexpensive stock. RNC has a footprint, wealthy customers and is generating cashflow. Everything YBR (and MQG) desire.

We'll see.