You are right about CGT, but not about the cross holding. You...

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Transversal

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23/12/18

08:53

Post #: 36946633
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Originally posted by rcs1359 ↑

Originally posted by Transversal
Sorry, I made a mistake above.

By acquiring BKW’s 42.7% in SOL, Company XYZ would end up owning only 42.7*44.0% = 18.8% of BKW.

Therefore, BKW’s existing shareholders would own 81.2% of BKW’s NCAV after disposal of their holding in SOL, i.e. 81.2%*2,344m$ = 1,903m$.

That is still less than BKW’s current market cap of 2,242m$, though; in particular, it follows that BKW’s operating business is being implicitly valued by the market at 339m$ (positive).

Apologies to all uninterested OMN shareholders for the continued digression.
I don't like to argue with you Tansversal and it is off topic, but if BKW sold out of SOL there would be no cross shareholding left and BKW shareholders, which include SOL, will own 100% of BKW's business not 81.2%. However, the issue that most people forget when valuing BKW's interest in SOL shares is the large unrealised capital gain that BKW has, and therefore the value of the SOL holding is not the market value of the SOL shares but rather the market value less the CGT payable by BKW if it is realised.

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You are right about CGT, but not about the cross holding. You have to think about it in terms of dilution of ownership from the perspective of an existing BKW shareholder. Read my post again and, if still unclear, feel free to start a new thread under BKW. Cheers.

OMN Price at posting: 57.0¢ Sentiment: Buy Disclosure: Held
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