#theroadto10000 have we reached 100 yet?, page-159

companies do multibillion dollars to 'divert heat, divert attention' regularly. its a renowned business tactic.

what glencore was doing when it bid for rio - trying to get market focus off their debt load, what IBM was doing in buying Red Hat to shift market focus off lack of growth,

how you perceive it rests on your overall view of the company and of sector outlook. one mans diversion is another mans portfolio diversification.

thats the label every board positions such deals under - and it also happens to be true. it just isnt often the entire truth - and often its actually not a good reason. diversification can add net risk.

@mikeross has precisely the right approach imo - ignore the reason for a deal - focus on what you think the outcome will be vs what share price is vs what you think share price will be post the deal over whatever investment time frame is

the one thing you;ve got in favour atm is a fairly low company valuation - reflecting the negative cashflow risk if the deal either gets up or esp if it doesnt, plus i imagine the market is pricing in some risk of added dilution in case debt terms cant be reached or similar

whether one's comfortable having exposure to a given executive is a separate question - for me its a binomial - yes or no - can i trust the information this company puts into the market

but as i say - think thats a separate question and once you answer that for yourself - then it should be a calculation of the math risk/return on offer

if they didnt do this deal it read as likely to me theyd be insolvent in about 12 months with no other changes

however they come to be in that position - i dont think you can fault any company for taking steps to address that risk

thats how i was able to say theyd try to do an acquisition before theyd even announced it.

interesting view on LiFx - think i just may buy a bulb