Melrose Industries Share Discussion Threads

[steeplejack] 14/4/2016 18:10

I'd be surprised if any deal is announced prior to the Referendum.If Brexit occurs,sterling will plummet for starters as there will be a justifiable concern as to whether the UK easily finance the record balance of payments deficit with investment income.Thus,I suspect Melrose might wish to wait for a level playing field.If we do quit the EU and Melrose are after a UK domiciled business then,it might,throw up a real bargain.However,if the proposed acquisition is overseas ,a Brexit vote is likely to make an overseas acquisition that much more expensive in sterling terms.My view is that the sectors like engineering,construction amongst others will react very badly to Brexit but I might well be wrong.Perhaps sterling will soar because we can tell Strasbourg judges to take a jump,as new exciting opportunities blossom for UK industry in the Summer sun :)

[eipgam] 14/4/2016 16:00

another ath

[eipgam] 07/4/2016 14:51

GB... I appreciate your point on timescales, I've been involved in a few company sales and certainly understand that every occasion is unique... I was just trying to recall if they moved quickly after the Charter knockback. A quick move may have indicated that they had more than one pot on the boil... as they may have on this occasion as well.

However, I didn't realise we had gone XD. Thanks

[meanwhile] 07/4/2016 12:41

The market is clueless. One further great buying opportunity presents itself.

[grahamburn] 07/4/2016 12:38

Past timescales in any business - especially when you're talking about deals - is certainly not a guide to future timescales.

The deal has to be at the right price and at the right time, rather than because a deal is required. There is little point in speculating, especially as MRO has a reputation of (nearly always) getting the right deal. Personally, I would prefer no deal to just any deal.

PS The price action today is partly due to going ex-div rather than boredom.

[eipgam] 07/4/2016 12:05

The market is getting bored with waiting... the sort term sector of it anyway.

If MRO do not get Philips Lighting then I see another 'buying opportunity'. Can anyone recall how long it took MRO to identify a new target after they lost out on CHTR?

[eipgam] 30/3/2016 17:38

Hmmm... interesting UT today

369.2 1063829 UT

Circa 2% above closing mid price (>7p)

[meanwhile] 30/3/2016 10:56

MRO almost at 360p now. The rise, not spectacular, seems almost relentless.
So why the rise and how far could it go? It's unlikely to be Brush; so it's likely to be speculation around the next acquisition. This itself is hardly a revelation, but you may wish to read on. An understanding of Logic is required.

I've followed MRO for over 10 years and they have made me some money. I've no wish to drive up the share price now, (because I'll be keeping my shares well into the future), but I am pleased to share my positive view of possible future moves in the price, based on my experience with MRO.

MRO's past acquisitions have invariably been a great success. The higher market has been slow to acknowledge this but I believe it's happening now. Their acquisitions, for which they paid market price (or sometimes seen as a little above), are now seen as having been cheap, at least to MRO. Cheap because of the potential for MRO to transform each business and, of course to MRO, they were always cheap.
The next acquisition, if viewed in the same light as past acquisitions, I expect will now be seen by the market as a cheap deal for MRO. And it could be a big one. The current capitalisation of £500M might need to add £3B, possibly more. It could be financed in a variety of ways but a big rights issue is expected to be part of it. We could see, just as a guess, an offer of 3 new shares at £3 for each old share currently held. This could raise almost half the £3B. The rest could come from a placing.

Now the main factor affecting the old MRO price at that point, is what the market saw that £3 raised being worth, when in MRO's hands and paying towards the acquisition. They could see it as a mediocre deal and see the £3 as still valued at £3, or even less if they saw it as a bad deal.
But they could see it as a great deal for MRO, and see the £3 as being (in its new home) being worth £3.50p (50p premium) or more. Before the new shares were traded, that premium would go on the old shares, because they would carry the option to buy shares (re-valued at £3.50) for £3. At 3 for 1, the premium would be 3x 50p = £1.50 total. So where would the old shares trade then?

My guess is that the next acquisition will be seen more widely by the market as a great deal for MRO.

[eipgam] 24/3/2016 20:27

Credit Suisse Raises Target Melrose Industries PLC (MRO) Outperform GBX 310 -> GBX 380

[dozey3] 20/3/2016 14:54

Well I've taken the opportunity to jump off MRO whilst it's still going up on hope and transfer to SMIN (Smiths Industries). Even if these are too big a mouthful for MRO some private equity outfit will surely take them on. In the meantime they are a big dollar earner which helps insure against BREXIT, and show signs of rising from their torpor themselves, let alone more than a half-decent yield.

[meanwhile] 18/3/2016 16:52

One further great buying opportunity presents itself.

[steeplejack] 18/3/2016 16:09

Umm They've had a hell of a run on no news.

[eipgam] 17/3/2016 14:43

Look at the share price go.... can anyone confirm my recollection? That it is worth keeping a hold of the residue shares as they may offer a special deal to existing shareholders when it comes to raising cash for the next purchase? I seem to recall this was the case in at least one previous fund raising.

PS that seemed a bit odd to me as well, MW, a call or email to investor relations will get clarification.

[meanwhile] 16/3/2016 21:00

From the 2015 results.

"The Board has proposed a final dividend of 2.6p per share (2014: 5.3p) rebased following the Elster disposal to reflect the resulting size of the Group."

I don't understand this. Surely the number of shares in issue (and the price)reflect the resulting size of the Group, not the dividend. This reduction makes the annual dividend approx. 1.5%.

[grahamburn] 11/3/2016 13:35

MEANWHILE

Sensible advice.

Personally, I decided to sell my small remaining 15% holding (which were held in my own name account) shortly after the return of capital at just under 287p. I switched all the proceeds from both the capital return and the sale of the revised holding into my ISA account. Then I repurchased around 55% of my original numerical holding at just over 285p (useful market turn!!). Hopefully, as and when the rights issue comes, I'll end up with a similar - or probably more - than I held before in this remarkable company. The balance of the cash from the two sales has been invested elsewhere, but any rights issue can be funded from next year's ISA allowance(hopefully!).

Let's see if this process proves profitable......

[meanwhile] 11/3/2016 10:51

The Capital Return and the consolidation left investors with about 15% of their original investment. Investors still keen to invest in MRO have plenty of cash to take up an expected Rights Issue, but probably too much cash & too little shares.
Taking this view, some investors will have been topping up their holding of MRO shares. It could have been done, if you were quick, at around 295p, as Eipgam has said. It could be done now at 343p. But is this too high and should we wait? Well if the market as a whole slumps, MRO will follow, and waiting will have paid off.
If the market doesn't slump before an acquisition & Rights Issue emerges, buyers could be trampled in the rush. (There just aren't many MRO shares around these days.) Better to have shares to sell at this time to raise cash for the Rights Issue. The Elster example, movements in the MRO price over the acquisition period, would support this.

I write this not for personal gain or benefit or from greed and avarice, but for the possible benefit of any of my non-professional colleagues on this site, who might wish to consider this view. I myself have modest needs; I always say that "Excess should be quite enough for anybody".

[eipgam] 10/3/2016 13:47

I don't know how accurate the data is, bearing in mind spec divis, rights issues and share consolidations, but I think we have just hit an all time high at 348.7p

[meanwhile] 08/3/2016 18:10

Eipgam,

Worse than useless, misleading, based on old data. 300p & outperform.
The analyst may have started to write his report 2 weeks ago and finished it off yesterday with the same data.
Moreover, such analyses are based on the current business, which we know is likely irrelevant. I hope it is anyway.

[meanwhile] 07/3/2016 11:30

Considerable movements lately, but this is now a small company with a much bigger reputation and prospects.
I remain a holder & buyer at the present & I'll tell you why. Now, I give this not to boost the share price, but to provide my colleagues on this site with a view to consider. A basic understanding of logic is required to follow this theme.

A big acquisition is expected fairly soon, it could be any day. We expect up to £4 Billion. This would be 800% of the company size currently. It could be £2B more likely. With a big acquisition, we expect a big rights issue. Only part of the cash may come from the rights issue but with say £2B to raise, we could see a 3 for 1 or even more, since in the past rights have been heavily discounted.

Until the new shares from a rights issue are traded, the old shares carry the rights option. Any new value in the deal (+ or-), seen in the market valuation of the acquired business relative to the price paid, is temporarily carried by these old shares. With a £500M company buying a £2B business, any + value the market sees is concentrated in a small space.

Boyle's law (PV=constant) applies here.

[eipgam] 04/3/2016 16:38

and another two

Barclays Reiterates Melrose Industries PLC (MRO) Overweight GBX 315

JPMorgan Chase & Co. Raises Target Melrose Industries PLC (MRO) Overweight GBX 355 -> GBX 360

[eipgam] 03/3/2016 18:12

Investec Raises Target Melrose Industries PLC (MRO) Buy GBX 325 -> GBX 360

[eipgam] 03/3/2016 13:24

I didn't realise audited figures were to be released today.... they got a perky response from the share price first thing

[meanwhile] 01/3/2016 22:28

Cisk, Mainly due to Holders buying back in, I expect.
But I recall that in past acquisitions, the shares have had a good run a month or 2 up to the announcement (I can't explain why, except maybe news leaking out prematurely) and just after the announcement, this simply on the promise of value being added to the acquired business. In Elster's case, I don't think the shares rose a great deal in the 2 years up to the sale, even though Elster's profitability did in that period. It was already in the price.

But there may still be good opportunities to buy before any announcement. If tomorrow's news is a bit dull, the shares could fall back and present a chance.
I'm looking for this, but the news could be promising enough to keep the rise going.