Mexico trade war off... for now. |
Unfortunately there isn't much of a break fee. And even the break fee doesn't look to me like it would be payable if the AAM share price goes so low that DWL shareholders vote against an unsweetened offer.
But a logical result of a tariff war could be consolidation of European car part suppliers - a counter-bid might come from that angle... |
Pre market is showing AXL at $5.05 compared to $5.82 at the time the offer was made.
At the pre market price the offer is now worth 79.85p.
Correction, 80.17p due to the fall in the £ against the $. |
Think this has further to drop watching and waiting for a buy entry point. Would not be suprised that the planned take over does not happen given tarrifs etc and low ball offer. Agree AAM could take a bit of a hammering when the US market opens |
If you actually go onto the Dowlais website to see their list of factories, you'll find that most are located close to major car manufacturer plants around Europe. You don't export completed drive trains from the UK to the US, you set up factories close to your customer.
Dowlais has a couple of factories in the US and Mexico. There might be some impact there, but it's more about the share price of AAM crashing when New York opens. |
davius: Weirdly there is only one US state where the UK is the main trade partner - UTAH...
What is it with the UK and Mormons? |
The UK has a trade deficit with the US so the giant Oompa Loompa would be an idiot to impose tariffs on the UK. Mind you, being an idiot is his speciality so there are no guarantees. |
So far UK is not on any tariff list so that is quite good. Trump likes Brexit... Starmer has said he means to keep brexit.
So I guess, if US cant get parts from Canada or Mexico it can get them from the UK....
I cant see Trump putting tariffs on the UK as otherwise that might upset the Brexit Applecart. |
Keep an eye on the share price of AAM and other US carmakers / component providers...
The automative industry in North America is totally intertwined between Canada, Mexico and the US. Car parts can cross the border several times as raw materials are turned into finished components.
I have no idea to what extent AAM is directly exposed to tariffs, but it won't matter much if GM, Ford, etc. stop buying AAM parts because they can't get the rest of the components needed... |
I wouldnt take any low offer. Its way too cheap.
they should at least get NAV value...
Its nuts... |
Are the BOD in for a sweetner from the bidder...for recommending the deal?... |
Topped up this morning.
The current bid value is about 82p. Even if some shareholders are minded to vote no because it's not a high enough price, retaining 49% of the combined entity probably is convincing enough as upside to obtain shareholder approval. (even though owning US shares is a problem for some)
Add the possibility of a counter-bid and/or a sweetened bid and I think there's value here. |
Do we know why this is so cheap compared to its NAV? |
It does seem to have quite a lot of NAV value compared to its share price..
And quite a nice dividend yield too. |
The above article ends with the following
But Russ Mould, investment director at AJ Bell, said: ‘This is far from a done deal and there is a real chance that Dowlais shareholders push back for a better offer.’ |
I expect a counter-bid. 4x EBITDA, 3 after synergies, isn't nearly enough.
The TI Fluids deal shows me that there's money out there for these sorts of assets. Besides the fact that there's surely a hedge / PE fund out there who might fancy buying Dowlais to sell off Metallurgy separate to the main automotive business.
There's lots of runway here. The London market is so sleepy though. A US company would already be trading above the bid price, in anticipation of a higher bid. |
For those of you who who bought in at 47 pence, good on you. For those of us who were in it from the de-merger, this is truly appalling news. I keep on stressing that the purpose of Melrose was to turn a business around, making it more lean etc. Dowlais appears to have done the opposite and does not seem too bothered by it (huge writedowns etc). I was under the impression that the Powder Metallurgy division was in itself worth close to £1 billion. How can the entire company be valued at £1.1 billion? This is rediculous. I hope this deal is firmly rejected. I was expecting a takeover offer for Dowlais in the region of between £3 to £4 per share - not £0.85. As I say, well done to those who bought under 50 pence per share. I am shocked and totally underwhelmed by these developments. If the BOD are unmotivated, then they should get a new BOD who have some balls. |
From the above article
Mark Fielding, an analyst at RBC Capital Markets, said: “The offer somewhat undervalues what is an attractive Tier 1 auto asset during the ongoing wider slump.”
At the moment the AXL shareholders aren't seeing the value and its share price is currently down 10%.
With about 45p in cash if the deal goes ahead I'm just going to hang on for now and wait to see how things progress. |
AXL share price doown 6%.
I took my profits at 76p |
Acquirer taking on a lot more debt - already had over $2 billion, plus the cash for the acquisition plus Dowlais debt - so expect the acquirer share price to fall thus reducing the 85p price - plus time element - before the end of the year. That's a long wait. Would not surprise me to see 70p. |
But ATM it's not looking like it will go through in it's current form. Given the way the share price has reacted. |
Hi,
No.If this goes through it will not be listed on the London stock exchange. |
will the combination continue on the 250 footsie please anyone |
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