Ann: Campbell Bros. Intends Making Offer for Ammt, page-13

re: Ann: Campbell Bros. Intends Making Offer ... Opportunistic yes, but is it a smart move by CPB or down right stupid? I think the latter.

AEC is different to other listed companies. Its total shareholding base is 30m shares, made up of approximately 1,500 shareholders. The Top 20 own 9m and of this 2m (including options) are owned by 4 board members - Rod Smith, Hamid Sheriff, Ron Grogan, Sharyn Long. Now add the 300 staff that receive a $1,000 worth of shares each year (by a couple of years), add the former employees that have never sold, throw the long term retail investors into the pot and the four LIC's on the register and CPB have a serious problem.

Straight from the CPB's bidding statement "....a minimum 90% acceptance condition", here's the how the register currently looks.

1-5,000 shares - 9.5%
5-10,000 shares 13%
10-100,000 - 40.5%
10,-100,000 - 37%

The smallest group owns nearly 10%, so they are going to need the board whether they like it or not. The retail holders are not going to fold, they will be following board recommendation, at the very least the staff will be.

Just on a couple of other fronts.
CPB have thrown numbers around about like 19x after tax earnings, 9.5x EBITDA on 2009 figures, but we all know that what the GFC did to mining here in Australia. The Marc business suffered from this first hand and is on the mend as we speak. As for the PSI technology, management spent nearly $2m from the 2009 financial year to keep its development. So its great that CPB bandy these figures, its not a true reflection of their current position. I've attended every AGM and EGM for the past four years and I have spoken in-depth with two of the directors and they are adamant that PSI is a world beater.

While I'm at it, I work on Macadam street (I've written this many times) and it would be correct in thinking that CPB's board or management have done some sort of drive-by (I would if I was going to spend $120m). What I can tell you is this, there number 3 building has been totally revamped and would be only weeks away from opening, it looks like some sort of space age lab. The new building which shareholders put money towards in July last year is on the cusp of the concrete being pored, I believe its 2 storey like the others and it will seriously be the biggest building in the area. So it would be right in thinking that the workload is only going to increase and CPB can see it also.

If there is any sort of downside it could be the figures that come through in the next couple of months but remember this, they are spending big capex dollars for its future and this effects the bottom line.

My bet is that AEC will drag it on for a while, engage CPB and have a re-vamped price upward of $4. Remember a third party offered AEC $1.50 a share for the PSI technology and CPB have given a value of zero.

P