PRK - Patrick Corporation

[RichKid]

Re: Patrick Corporation (PRK)

Patrick lower again today, some news on the current situation: http://www.smh.com.au/news/business/patrick-threatens-rail-breakup/2005/09/14/1126377373408.html

TOL bidder's statement due by tomorrow as well. I'm waiting for PRK to recover to above $7. Although Little says no one else is interested in bidding for PRK, with mining booms normally lasting years and years there is bound to be someone with an eye on essential infrastructure assets.

 

[RichKid]

Re: Patrick Corporation (PRK)

Okay, bidder statement is out, also another angle on getting control.

I was wondering why I'm the only one keeping this thread going, aren't takeovers normally a hot topic? I reckon it's because things are quiet after the initial flurry in a takeover (similar to WMC), then bit by bit it hots up and everyone is interested again. Kinda like the first stage of an uptrend, very few people know intitially and then everyone knows.

NOTE: I hold PRK.

CBA Holds Key To TOL's PRK Takeover

Monday, August 22, 2005 8:32:40 PM ET
Dow Jones Newswires 1016 [Dow Jones]

Martin Littler, head of Australian equities at Colonial First State, CBA's (CBA.AU) fund management arm, refuses to indicate if they will accept takeover offer from Toll Holdings (TOL.AU) for their stake in Patrick Corp. (PRK.AU), saying "we never comment on takeovers." However getting CBA on board, if they're not on the boat already, will be vital to TOL's hopes after CBA increased its major stake in PRK to 13.4% in late July, potentially blocking any full takeover under 90% compulsory acquisition provisions. (WEL)
-----
-----

PRK Would Boost Toll Value To A$16-Macquarie

Thursday, September 15, 2005 9:31:53 PM ET
Dow Jones Newswires 1129 [Dow Jones]

STOCK CALL: Macquarie Research Equities says the successful acquisition of Patrick (PRK.AU) could boost Toll's (TOL.AU) valuation to A$15.50-A$16.00. "In our view the Toll share price does not currently reflect the potential benefits of the successful acquisition of Patrick," Macquarie says, keeps Outperform call, base valuation of A$14.75/ share, 12-month price target of A$15.50. Toll last down 13 cents to A$13.73, PRK down 7 cents to A$6.72, just above notional offer price at time of bid of A$6.70/share. (BBA)

 

[RichKid]

Re: Patrick Corporation (PRK)

A great article summarising the state of play, looks like TOL will hang around on the board if it can't take complete control so I reckon this bid is going higher as Little clearly wants PRK, even at the cost of having regular stoushes with Corrigan, but that may just be a tactic. My only concern is the ACCC's take on things and how it'll affect it. So much uncertainty proves why there is never a truly safe investment. Apparently the cost savings to TOL have been deliberately underestimated so that TOL can justify a lower bid.

Toll expects to join top 30
15 Sep 2005 17:31 AAP
(http://afr.com/articles/2005/09/15/1126750069914.html)

Logistics firm Toll Holdings estimates it can achieve full-year gross synergies of $65 million within three years if its $4.6 billion hostile takeover offer for stevedore Patrick Corp succeeds. Synergies after tax were estimated at $45.5 million.

Toll, which released its bidder's statement for Patrick on Thursday, also said it estimated one-off restructuring costs of $36 million to achieve the estimated gross annual synergies.

The gross synergies of $65 million would come from operational cost savings (including technology systems), administration cost savings and additional earnings from revenue growth.

Toll said the synergies could differ from the estimates due to limited public information available on Patrick.

Toll estimated that the combined group would have a pro forma net profit before non-recurring items of $496 million for 2005/06.

Toll's forecast reported net profit for the combined group is $354 million for the year ending June 30, 2006, based on an acquisition date of January 1, 2006.

Toll said that it expected a standalone net profit after non-recurring items of $250 million under the new AIFRS accounting standards in 2005/06.

It said that if it became entitled to compulsorily acquire all of Patrick's shares it would centralise corporate head office functions and immediately start to review Patrick's operations, which would take about three months. Synergies generated would improve the merged group's capability to supply end-to-end logistics services to customers.

If Toll did not gain full control of Patrick but waived the condition of its bid that it be entitled to acquire all Patrick shares, it would maintain Patrick's listing on the Australian Stock Exchange and seek proportionate representation on the Patrick board.

Toll said it would reduce the merged group's investment in airline Virgin Blue, of which Patrick is the controlling shareholder with 62.4 per cent, to as low as 7.7 per cent.

Toll said it had no expertise to provide to Virgin Blue's passenger airline business.

Toll also intended to enter into talks with Virgin Blue to transfer Toll's air freight requirements to Virgin Blue.

The merged group is expected to have a market capitalisation of about $8.6 billion, making it one of the 30 biggest companies listed on the Australian Stock Exchange.

The transport and logistics group would have annual revenues of more than $7 billion and be in a strong position to fund capital expenditure and participate in regional growth opportunities.

Toll said Patrick was facing significant additional capital reinvestment requirements which, in Toll's view, was likely to place a significant strain on Patrick's prospective returns to shareholders as a standalone company.

"In contrast, the merged group will have a conservative capital structure with low gearing and strong operating cash flows, leaving it in a strong position to fund capital expenditure plans and further regional growth opportunities."

Toll managing director Paul Little said Toll had delivered significantly superior growth in earnings and operating cash flow per share compared with Patrick over the last five years.

One thousand dollars invested in Toll five years ago would now be worth about $5980 today compared with about $1925 for Patrick.

The merged group also would have significantly better structured exposure to the volatile airline industry.

"Both the Toll and Patrick share prices have reacted very positively to the offer," Mr Little said.

"Patrick's market value is now around $850 million higher than before market speculation of a Toll takeover bid for Patrick started in July. This reinforces the positive feedback that we have received from shareholders and customers."

Toll is offering 0.4 of its shares and 75 ¢ for each Patrick share.

Patrick shareholders also will receive an in specie fully franked special dividend from Patrick of 0.3 Virgin Blue shares for each Patrick share. The offer initially valued Patrick at $6.70 per share or about $4.6 billion.

 

[RichKid]

Re: Patrick Corporation (PRK)

CSFB Says Switch To Patrick From Toll

Thursday, September 15, 2005 6:16:43 PM ET
Dow Jones Newswires

0813 [Dow Jones] STOCK CALL: Credit Suisse First Boston recommends investors consider switching from Toll (TOL.AU) into Patrick (PRK.AU) pending expected protracted resolution of TOL's takeover bid, believing TOL will increase bid price, with up to another 35 cents/share payable before PRK no longer EPS accretive in first year. Says TOL bidder's statement highlights A$65 million of synergy benefits over 3 years and willingness to make "undertakings and divestments" in order to satisfy ACCC. TOL last A$13.62, PRK A$6.74. (WEL)

A chart showing the gap is below, gaps love to be filled and with a recent pivot I think the dowtrend is now reversing, consolidation at the very least imo. The uppermost horizontal line around $6.87 is the previous all time high, I expect this to climb above it eventually. This imho is a low risk trade provided the stop is very tight, potential for very high returns if the market gets excited, otherwise just a small profit judging by the bid figures going around (assuming no one out bids TOLL).

I get the impression the analysts are increasing the forecasts for both TOL and PRK so that the respective valuations will drive the bid price higher (as bid constitutes a portion of TOL's sp and because PRK says it is worth more in the future so TOL should pay more).

 

[RichKid]

Re: Patrick Corporation (PRK)

PRK lower again over the week, although an up day today closing at 6.60 from memory. This seems to be a level at which it finds support even when the rest of the market is in a downspin.

 

[RichKid]

Re: Patrick Corporation (PRK)

Been awhile since this was updated, PRK near all time highs but no volume worth noting, need another week or so probably to get the holiday laziness out of the way.

 

[trader]

Re: Patrick Corporation (PRK)

Since there is no takeover anymore share price should drop back to $6.00
but then again rail fright monopoly is in a mess too, so maybe share value
is less than $ 5.00 . But it will take the market awhile to go there.

 

[RichKid]

This thread is now closed due to the takeover of Patrick by Toll Holdings.