SEL - S8 Limited

[professor_frink]

Recently had a friend asking me about this one.

Real estate co. that's bought harvey world travel and a few other travel agencies. They seem to be expanding the business pretty well at the moment, but being a fan of charts and the like I couldn't give my friend any sort of opinion of the business in general. Any of the fundies on the forum know anything about them and have an opinion?

 

[robert toms]

I have watched this company for a couple of years.They made a failed hostile takeover bid for Breakfree about three years ago.Both were in the same holiday rental and management of apartment type businesses.S8 bided its time and bought into travel agents...and of late there has been a rapid trail of acquistions.S8 is nothing if not ambitious.
If they can get their synergies right and manage their new purchases well they may well be on the way to bigger things.Who knows?
They have been a successful company in the past and paid a useful dividend.

 

[Ken]

does MFS have to reach 4.25 to take over SEL? what will this mean for SEL shareholders?

 

[scsl]

does MFS have to reach 4.25 to take over SEL? what will this mean for SEL shareholders?

Ken, the $4.25 relates to the volume weighted average price of MFS. The S8 board will only be obliged to recommend the bid in the event the VWAP of the MFS share offered for each S8 share exceeds $4.25.

Although currently the VWAP may be less than $4.25, I have a strong feeling that the S8 board are working closely and positively with MFS and are keen to see the merger proceed. They have even signed up for a break fee and an agreement to not 'shop around' for a better deal.

Do you own any SEL or MFS shares?

 

[Ken]

i bought SEL shares at 3.53 and they got eaten up for sale at 4.79 in that initial jump when the news came of the mfs takeover.

I bought in again at 4.20.

 

[Ken]

sel has gone up to 4.28. So i am guessing the merger is taking place.

Anyone know when?

Theres been no announcements i read somewhere it was happening at end of the month.

 

[Ken]

hit 4.50 today

 

[smoothsatin]

Looks like most of the bears are out of the stock now, hopefully it should continue to float upwards now. This thing will go through in one form or another, i think i have said this on another thread, but ultimately it is unambiguously beneficial for both parties and management are committed to the deal, thus it will get up eventually. Whoops just had a thought, was today the deadline? hmmbetter check that....

 

[scsl]

hit 4.50 today

Yeah and MFS closed just off its high of $4.10. MFS hasn't closed above $4 for about three weeks.

 

[Ken]

how high will SEL go? there seems to be a direct link between the SEL share price and the MFS share price at the moment.

 

[Nudibranch]

I read in the terms of the merger that SEL stock-holders would be granted 1.15 times as many shares in MFS in the case that the merger is successful. At present, SEL is trading at $4.49 and MFS is trading at $4.15.

Assuming (as many people are doing, with these particular circumstances) that the merger does go ahead smoothly, then SEL shares should be worth 1.15 times $4.15 (the current MFS share-price). That is $4.77 and represents a 6% premium on the current SEL price.

This 6% premium looks like easy pickings for investors. Have I missed something? I speculate that perhaps the SEL price has not yet reflected the "merger-value" because profit-takers have been selling out of the company and there may also be some uncertainty in the marketplace. Should we expect the SEL share price to approach 1.15 times that of the MFS share price as details and timing of the merger become clearer to the market?

 

[Ken]

i am going to hold, as i believe MFS are going places

 

[michael_selway]

i am going to hold, as i believe MFS are going places

is MFS better or SEL at curent prices u think?

thx

MS

 

[scsl]

is MFS better or SEL at curent prices u think?

thx

MS

MFS is undervalued at its last price of $4.20, but I am biased as I own shares.

SEL's sp has had a very good week, and looking ahead, it could be an interesting short term trade, but that is all it will be. MFS will eventually succeed in this merger and its sp rise this week illustrates the confidence both retail and institutional investors have in the company.

The travel sector has longed lagged in consolidation and this merger of two well-known and successful travel companies will not only increase productivity and cost savings, but will also enable MFS to have greater buying power. Integration will not be an easy task but the MFS management have a lot of experience and would not have announced such a deal had they thought it would have been too difficult and thus a risk to shareholders.

 

[Ken]

S8 now 4.72


what would people recommend. continue to hold. i bought in at 4.20 say am tempted to take the profit. however how many more legs does it have.

is MFS potentially a $10+ stock if it continues to make takeovers.

i would like to hold for the MFS deal but am i better off selling SEL now and then waiting for MFS to drop down, or is MFS just going to continue its rise gradually, rapidly, on its merry way.....

peoples thoughts.

once the takeover takes place, what will happen to MFS share price. will it dip as SEL shareholders sell off and take profits???

 

[Nudibranch]

Factor of 1.15

SEL was up almost 5% today and closed at $4.72. Of course MFS also moved upwards today by almost 2% and closed at $4.30. Thus the SEL sp is now 1.10 times that of the MFS sp.

I said on Thursday last week:

Assuming (as many people are doing, with these particular circumstances) that the merger does go ahead smoothly, then SEL shares should be worth 1.15 times $4.15 (the current MFS share-price). That is $4.77 and represents a 6% premium on the current SEL price.

Now it is the case that (again, assuming that the merger goes ahead smoothly) the SEL shares are still undervalued with regard to the amount of MFS shares that they are likely to be worth after the merger. With the MFS sp at $4.30, SEL ought to be equivalent to 1.15 times that value; ~$4.95. That gain still represents almost a 5% premium on the current SEL sp. Is it easy pickings? I think so. Last week I said:

Should we expect the SEL share price to approach 1.15 times that of the MFS share price as details and timing of the merger become clearer to the market?

And I am still waiting to be notified of a hole in my logic. My feeling has been bolstered by the narrowing of that potential profit margin on the SEL sp from 6% last week to 5% today. As it was noted earlier by Ken:

there seems to be a direct link between the SEL share price and the MFS share price at the moment.

I certainly agree, though the diffence in sp's fits only crudely with the system that I have described and is outlined in the terms of the potential merger.
Ken mentioned today that he is considering selling his SEL stock today after its substantial rise:

what would people recommend. continue to hold. i bought in at 4.20 say am tempted to take the profit. however how many more legs does it have.

Certainly, I recommend holding the stock, or further investing in SEL, because if nothing much happens there is still an easy 5% to be reaped. Beyond that advice, I have to be more speculative. MFS does appear to have momentum of its own and even appears to be pulling SEL up further with it. As for MFS becoming a $10+ stock - that is far too speculative for me. A lull in the MFS sp after the merger? I see stagnation for up to a week, but no more because MFS propensity for acquisitions and acumen for growth has established an appreciable momentum (for now).

 

[Nudibranch]

A week later and the SEL sp has declined slightly to $4.70 after briefly reaching $4.80 on Friday last week (from $4.72 this time last week). I would speculate that investors are eager to hear information regarding the potential (and likely) merger with MFS.

The MFS sp closed today at $4.34 and represented a modest rise from its price last week at $4.30.

A pretty quiet news week for these companies. MFS is now listed in the ASX200...

 

[Ken]

i really wanted to keep SEL, as i think they are a real winner, and i wanted to hold MFS.

However i jumped out at 4.78, as i felt RIO Tinto were buidling some momentum.

I guess the move has payed off thus far as rio have risen $7.00.

once my margin loan is linked i will be watching these two closely.

i will be looking for another opportunity, but i doubt it will come in.

 

[Ken]

$4.64 chance vto make 50 cents a share.

the drop in mfs share price would be an indication that they think they are paying to much for sel.

Quesiton.

is the final price payed to SEL shareholders 1.15 ontop of the final closing price. or is it 5.10-5.15 as stated in the announcement.

It pretty obvious SEL shareholders would take the offer up, would be silly not too.


I think i would take the cash over, if MFS share price isn't around $4.25

 

[dubiousinfo]

$4.64 chance vto make 50 cents a share.

the drop in mfs share price would be an indication that they think they are paying to much for sel.

Quesiton.

is the final price payed to SEL shareholders 1.15 ontop of the final closing price. or is it 5.10-5.15 as stated in the announcement.

It pretty obvious SEL shareholders would take the offer up, would be silly not too.


I think i would take the cash over, if MFS share price isn't around $4.25

There isn't a full cash offer for the shares. The offer is a choice of either
1. 1 MFS share for each S8 share plus 70c, or
2. 1.15 MFS shares for each S8 share

In addition to both of the above options, you will recieve 15c as a special dividend for each S8 share