Ann: ATO decision means Blackstone Acquisition will not proceed, page-11

The AFR ran a story yesterday quoting Bell Potter sources who said they thought Blackstone could now make a bid for the entire company. I assume that's what led to the surge of buying, a decrease in the number of shares on offer and a hike in the share price to $1.015 at one point.

Bell Potter was an adviser to AMA on the scheme arrangement so they are not neutral observers in this. They said they thought that, even if there was no further offer, AMA might do some deal with Blackstone to provide procurement services to Service King.They thought a bid for the whole company would now be "a reasonable alternative" to the failed demerger scheme because Blackstone could sell any unwanted divisions and just keep panel.

That sounds like two bob each way to me. First they recommend a complicated scheme and now they say the simple approach would work. Well, why didn't they go that way in the first place? The reason is that a buyout of the whole company would have generated big cap gain liabilities, although nothing a decent premium in the bid wouldn't absorb. However. as we have seen, Blackstone was averse to paying a decent premium and the ATO nixed their plan to avoid cap gain liabilities.

Bell Potter is holding to its $1.25 valuation and rates AMA a buy. Wilsons reportedly are sticking to their $1.00 valuation and rating it a hold. Malone is not known as one who would be associated with failure, so I guess this is not over yet.