is this real, page-8

CK

There is no doubt that CML is an underperforming wilder beast and that PE with a proven manager is the right workshop / environment to fix the mess.

The issue will be that KKR can generate a leveraged equity return by using capital more efficiently (ie debt), but won't want to give CML shareholders too much of the benchmark WOW performance gap if you like.

I personally can't see even a willing KKR paying too much over the odds for CML (ie >A$14.50). Then again they did smash the ceiling on acquiring the Brambles Clean Away business for their first PE deal in Australia and the largest in PE deal in history locally.

Maybe the strategy for this one is to wait until Tuesday / Wednesday when the SP comes off to mid / late A$12s and start to accumulate a position over the following few days, averaging down awaiting an event...

Three major downside concerns – (1) price expectations (CML and the market appear to be getting greedy) and (2) CML board and Premier Investments (Lew) will trade blows in the media (unhelpful), and (3) timing likely to be a lot more drawn out than everyone suspects