What a great deal!!! K.to Kerry Stokes. OR should I say to his...

What a great deal!!! K.to Kerry Stokes. OR should I say to his son Ryan Stokes. After all Kerry is getting a bit old in the tooth. The only way Seven shareholders will benefit is they married Ryan Stokes.
To those who dont know Kerry wants to sell his 100% owned private company, WesTrac to Seven Network (SEV) for $2billion (115mill SEV shares and Westrac has $1billion in debt). Kerry owns 48.7% of SEV. Prior to selling Westrac, Kerry will take $96million from Westrac in the form of dividends. If the deal proceeds Seven will pay $600million of WesTrac debt from its cash pile.
Well this deal answers 3 major questions. Why Kerry Stokes was not interested in promoting SEV shares. Why he wrote down the value of Seven Media Group (that owns Channel 7, numerous magazines, yahoo!7) to 0. Thats funny my topless barmaid said to me. I never undervalue my assets she exclaimed. (See my previous post on XJO forum). What Stokes was successfully doing was preventing any upside to SEV shares. Then when it came to selling WesTrac to Seven he could ask for the maximum number of SEV shares. Excellent!
It also explains why last year Kerry said he couldnt find any cheap assets to buy. In the midst of the global financial crisis I thought it was a bit suspicious. Now we know. His masterplan always involved Seven buying WestTrac. Brilliant!
Seven Director Bruce McWilliam regularly bought shares between April 09 to Oct 09. When he suddenly stopped buying in October, my barmaid reckoned he had just run out of money. Nope I said to her. He is a high net worth individual. They dont run out of money like that. It would now seem he found out about the deal and decided not to buy any more shares.
As a SEV shareholder, my big problem is we are buying an overpriced asset. I am not a accountant working at WesTrac so dont know its real market value. But, $2 billion dollars for a private company? Who is he kidding? Not many private companies in Australia are worth $2 billion dollars. Can you name any? Probably not.... And that is because at $2 billion WesTrac is way over priced. Besides, common sense dictates WesTrac is overpriced. Lets see, Kerry Stokes is hardly going to sell one of his crown jewels below market price is he now??? Remember he is in the top 10 richest Australians (BRW Rich 200, May 09). Selling assets above market price is how he became rich! Even though my topless barmaid index (see my previous post in XJO forum) suggests mining will continue to experience growth in the immediate future, the fact remains shareholders are paying for an overpriced asset.
To be continued.....This will be my first in a series of articles on the merger. I promise it will not be as long as the 600+ pages of scheme booklets. LOL.
Cheers,
hih
In Life there are Winners and Losers Bill Gates
I say, In life there is Kerry Stokes and Seven shareholders
My email, [email protected]
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