I'll tell you what I did. Shortly after the deal was announced I...

I'll tell you what I did. Shortly after the deal was announced I increased my position by 50% because:  

1) I like Watpac as a cheap exposure to the infrastructure boom expected to peak in 1-2 years so I bought more share to maintain Watpac's weighting in my portfolio.

2) The cost base for my original shares were close to the pre-deal announcement share price. The way I looked at it was that if the deal went through the profits from selling half of my shares would reduce the cost base of the remaining 50% to a level which is slightly above the value of cash.

I think that the company is worth more than Besix's offer assuming that Watpac can produce sustainable profit margins in the of 2-3% (which are not extraordinary in the industry). At these margins, a $1b revenue would generate net profits of $20m - $30m which at a 8x p/e multiple and adding on say $40 million surplus cash would result in a market cap of $200m - $280m. As a comparison, Besix's offer at 92 cents values the equity at $171m.

I'll probably still vote yes as doing so would potentially allow me to de-risk my remaining stake and at the same time still keep one foot in the door. To some extent, I'm hoping that Besix's control will be an improvement but at the same time mindful that there is incentive to drive Watpac even cheaper for takeover down the line.

http://chasingvalue.com.au/