I found myself with interests in both predator and prey and I wasn't too pleased with the bid. However, AUT did offer a price comparable with that paid (to TCEI??) for the 6% WI. So, despite the fact that they "got a bargain", the price paid was roughly market and broadly reflected the market's valuation of the total acreage held looking at AUT's SP. If JS had offered anything significantly more, it might have resulted in AUT shareholder dilution and that would have wrecked the board's track record.
So, even if AUT does have its slide rule out and is measuring up TXN's EFS acreage, a purchase of that at the price that TXN hopes to get might look dilutive at AUT's current price. If AUT is looking at TXN, it is more likely to move after the now well overdue re-rating happens.
Further, as TXN is looking to parcel up the EFS interests, I see no reason why AUT would bid for any more than the demerged asset. AUT still emphasises its EFS focus.
That's my take on it. Both companies are undervalued by the market and AUT has a record over the last 30 months of doing deals that are demonstrably immediately enhancing to its shareholders. It will have to wait for its own re-rating before it could comfortably meet TXN's price expectation.
TXN Price at posting:
34.5¢ Sentiment: Hold Disclosure: Held
