Melrose Industries Share Discussion Threads

[eipgam] 06/7/2016 09:37

Well m/w... you called £6. Nearly right! Well done...

[sogoesit] 06/7/2016 08:56

A USD deal; great. Just what is needed!
(As far away from europe as possible!).

[meanwhile] 03/7/2016 10:43

I'm not a member, my friend, but she would get my vote.

[sogoesit] 01/7/2016 17:13

Thanks for your thoughts on Melrose, Meanwhile, appreciated.

I voted Leave on my understanding of the issues, BTW, but thanks also for your advice to "get out into the real world". I will try to do that in future but my "real world" seems to be different to yours ;-).

Have a good weekend and if you're a Tory Member vote Leadsom, please!

[meanwhile] 30/6/2016 10:43

As far as I can find, both Christopher Miller and David Roper, co-founders of Melrose, are close to 65 years of age. The Company may go on for very many years yet but these 2 fellows can't have many 'buy-improve-sell' cycles left in their thoughts, maybe only one. Now neither are reckless, far from it, but if you were in their position, wouldn't you want to go out with one last 'big bang'.

My guess, (but remember this is based on only 45 years of studying and investing), is that this is what these 2 fellows are planning. This widens the target hugely and means we can expect a massive issue of new stock/shares for the acquisition (or acquisitions). I am trusting that the current, old shares will carry a very large rights and will rise strongly on any announcement. This is why I am buying them still.

Brexit has depressed the Pound, which won't help with many potential overseas targets but EU targets may still be on. We will need to trust them to predict the outcome closely enough.

On Brexit, I've supported the Conservative Party for 50 years but I'll not vote that way again with a PM who supports close political ties with the EU.
Cameron, and his stooge Osborne, lied to us about the damage to the economy and about the 'new deal' Cameron had made. How on earth can you have the UK as a member of the Single Market but not have 'ever closer union'. The 2 are not compatible. Free movement of labour would drag everything else with it.

[sogoesit] 27/6/2016 20:42

I have been caught by surprise (who hasn't?).
But since, in general, other countries stock markets either equally or more hard hit than the UK's indicates to me that there is more at play than just the UK in all this.
Perhaps this has triggered contagion towards political instability in EU and questioning of the EU project or it has triggered the sell-off which, to my mind, started in August of last year and attempted again in February this year.
Certainly none of the rallies since last year have produced higher highs so we continue in a downtrend.
In such circumstances MRO's management should be very cautious in my view.

[meanwhile] 24/6/2016 17:19

I largely agree, Sogoesit; I expect they have a target, or more, lined up but a revaluation of prospects will be required now, following the unexpected referendum result. It may be that the possibility of a decisive Exit from the EU was not even given much weight. There may be fresh opportunities arising as a result of the market's re-alignment.
Also the pound's fall may be quite limiting. We could have had 1.60 USD today but instead we have 1.36.

[sogoesit] 24/6/2016 13:20

Now that the Great Debate is settled (favourably I might add) I'm expecting a move on an acquisition.
I would have hoped that a competent management, as these folks truly are, would have a target lined up that is either robust in both scenarios or one for each scenario.
Interesting times...

[meanwhile] 23/6/2016 08:36

Oh no, just another nutter.

[steeplejack] 23/6/2016 05:41

I'm shaking it boss,I'm shaking it!

[eipgam] 22/6/2016 12:58

Are you anticipating a lukewarm reaction to news, SJ?

[steeplejack] 22/6/2016 12:35

Sometimes "doing nothing is a mighty cool hand".Beware when a deal is announced!

[eipgam] 20/6/2016 13:30

Strong share price action in last few days...

[meanwhile] 14/6/2016 16:53

Graham,

I suppose it depends to some extent on the level of your current holding relative to how much cash you have to subscribe to any new shares. With the MRO current valuation of around £550(150 million shares), a big acquisition could involve a rights issue raising 2 or 3 times that figure, in addition to a share placing or other raising of capital.

However, more important in my mind, and what makes me want to accumulate more shares now, is the effect that such an announcement will have on the current 150M shares, as a result of them carrying Rights. If the acquisition is immediately seen by the market as a good one, then the promise of good progress to come is, for a short time, carried by those 150 Million shares.

Look at the MRO share movements around the time of the announcement of the Elster buy.

[grahamburn] 14/6/2016 12:41

Would it not make equal sense to hold fire on adding to your holding until such time as a new acquisition is announced? That is now almost certain to be after the referendum and the dust has settled. If it is a leave vote and the level of uncertainty rises, then potential targets will be perceived to offer better medium term turnround value. If a vote to remain prevails, then after the current sell-off, intrinsic valuations may still remain favourable

At that time there will inevitably(?) be a rights issue/open offer to fund the deal. The probable price for new shares will probably be much more favourable than right now.

[meanwhile] 14/6/2016 11:45

It seems that not even MRO can stand against the pre-referendum selling pressure. In my view, we could see a further good opportunity to buy in the next few days if the polls continue to favour BREXIT.
I am presently thinking of buying if it goes below 365-370p, unless the decline gathers even more pace and then I'll wait for lower.

An Exit vote, and a further market decline, could provide some great opportunities in the UK but a falling pound would make it expensive to buy overseas.

Best Wishes,
Meanwhile (role-model to Nigel Farage)

[meanwhile] 09/6/2016 17:19

Yes, and held above 400p at the day's close, for the 1st time I think.

[eipgam] 09/6/2016 16:19

another ath

[meanwhile] 03/6/2016 10:41

Due to my bad eyesight, an iphone and my carelessness, my last remarks were wrongly addressed to Eipgam, where they were meant to respond to the nonsense from Sogoesit.

My deep apologies, Eipgam.

[meanwhile] 02/6/2016 19:47

Eipgam,
I can't follow you. Please buy a book on market valuation and raising of capital via rights issues.

[meanwhile] 02/6/2016 19:47

Eipgam,
I can't follow you. Please buy a book on market valuation and raising of capital via rights issues.

[sogoesit] 02/6/2016 18:25

Well, that doesn't seem to "add-up" to me.... and doesn't account for risk (unless your "probabilities" account for expected value(?)).

Brush is worth no more than a little over £1/share imv and there is pension risk (using a 3.5% discount factor)... unless you say their "paper" will be used, something i find difficult to believe. Your view on there being current value of £500m+ (the current market cap) must then (logically?) mean that all future value has been arbitraged away (NPV on new deal of 0 or Zip)? One way or another they have to come up with cash of about £1bn or £6.9/current share...
Or the gearing will have to be a lot higher than 50%.

[meanwhile] 01/6/2016 10:22

Eipgam,
Here's a bit of example maths for MRO's next acquisition.
Suppose UBS's example is fairly close and £2Bn total is raised, £1Bn of which is on the back of existing shares, value £550M, (the Rights Issue).
We assume there is a modest 50% probability of Melrose doubling the value of the acquisition in 3 years, thereby doubling (at 50% probability) the £1Bn which was issued on the back of the £550M.
So there is a 50% probability of a £1Bn gain for the holders of the £550M current shares. Around £100M has already been factored in by the recent rise.
You can now do the arithmetic for the premium the current shares might carry, but it looks a lot to me.

[meanwhile] 31/5/2016 22:40

Eipgam, It's maths here, my friend.
Arithmetic would be the workings or operations around given numbers.
What is required here is the development of relationships between unknown quantities i.e Maths.

As for "MW, do you see a flaw in their calculations?", they haven't done any logical calculations.