AMA reorganization, page-28

Blackstone has lobbed another takeover bid for an Australian company, this time a $3bn bid to buy IOF, an REIT with a decent office portfolio. The IOF directors are supporting the bid which includes a 10% premium to the previous closing price. As a result, IOF jumped 13% today after going nowhere for the past couple of years.

AMA, a bit like IOF, has gone nowhere for the past three years. Without knowing the ins and outs of the bid to buy IOF, I cannot help but draw a negative comparison with the bid to buy AMA. The bid not only has no premium built in - it practically suggests a negative premium (call it a discount). The bid is conditional on a demerger and is set up to cherry pick the most lucrative part of AMA, with no regard for the other 15% of the business or a final dividend to shareholders for the past year's operations. AMA is devalued by the market as a result.

Blackstone is said to have $450bn worth of investments under management. Their $0.5bn bid for 85% of AMA represents one tenth of one percent of their current asset base. This lowball offer has knocked 20% off the AMA share price since March and I am totally at a loss to understand why the AMA directors would support it and recommend it to shareholders. In my opinion, they should be re-evaluating the deal and doing what the STO directors did in a similar situation, which is to recognize a grab for what it is and reject it.