Wow - a mega disaster in the making, page-65

Well DOW has been cashflow positive. I think SPO will be value destroying, but DOW will not be worth cents in the dollar like SGH. I think that it would be a mistake to see the parallels between those two cases, and take the implication of that parallel too far.

Maybe have a look at SUL's takeover of Rebel sport in October 2011. The market didn't like that deal at all, with analysts saying that Rebel couldn't easily be turned around and was a dog bought from a private equity vendor who had already made the easy cuts. The SP closed underwater on day 1, and hung around the crap raise price for about a month before shooting north. In the end those most negative of the analysts were wrong about that one.

In this case I suspect that Dow has paid $1b more than what SPO was worth, once you take into account assuming the debts etc, but they will be able to find some parts that do well, and they will be able to find synergies to maybe claw back another $500m value over time I suspect. And then I will not be arrogant enough to say that my confidence in my own assessment is any higher than 50% - so I give myself a 50% chance of being wrong about the value to DOW too. We will not know how this deal pans out for a couple of years I suspect.