TOY - Toys 'R' Us Anz

[constable]

Oversold hmmmm looks like gdn yesterday! you cant tell me a 20% drop in profit is worth a 20% drop in sp. Sounds like a simplistic view , but i bet some bargain hunters are at the trough now . For me this is worth holding over the weekend just to see what happens next (in at 1.325.).
anyones thoughts?
note i am a compulsive gambler!

 

[scranch]

1.Fun needs shareholder aproval before the deal can go ahead,there will be a special meeting to vote on it before 31-12-06.
2.Maximum holding of ABC is proposed to be capped at 19.7%
3.Valuation of shares to ABC to be volume weighted average of 30 days after the announcement,with a FLOOR and a CEILING.
All this poses a few questions for me.
Is it likely they will win aproval?(Volume yesterday was over 4million,today will be over 2 by the looks of things).probably depends on whose buying,PPT was holding something around 8-11%.
If the cap for ABC is 19.7% what happens percentage wise?Will ABC end up taking over FUN?Can't see them offering cash,would have to be a share swap.
What effect would a ceiling and a floor on the price of FUN have?
Would all bets be off if the price fell outside the guidelines,which are unknown to us?
The 5million cash FuN is offering fits in perfectly with the amount raised by the share purchase plan.
Wonder how big their reserves are? Haven't tried to look the balance sheet,my eyes just glaze over.
Brian

 

[TheRage]

Brian I agree with your comments and questions. Fun had about 15 million in the bank at the last annual report. I bought back into to fun at 1.50 a few months ago and on projected earnings it appeared to be a bargain. On current earnings minus the dilution of ABS 1.50 is probably fair value. I have been tempted in the 1.20 range to average down my investment. I want to know whether I can trust management before I do and I think the uncertainty of the Judica purchase maybe holding me back. I have been in and out of Fun several times over the past few years. I have been happy with managements job up until now. The company is focussing so strongly on positive EPS acretion that I think it is trying to outgrow itself. I think I would have been happier as a shareholder had Fun managment come out and said, okay we didn't do such a great job this year and maybe some of it occured due to the market but we won't blame that instead let's focus on consolidating our business look for cost efficiencies and maybe buy back a few shares instead of making aquisitions all the time. Having a defensive strategy going into an evironment of higher interest rates can sometimes be a smart thing.

 

[TheRage]

The smoke and mirrors style disclosure of the Judica acquisition is starting to wane my enthusiasm for this company. Yesterday I received the voting forms for the acquisition and some information. A quick scan revealed something else that I missed. Fun is quoting ABC as getting 19% ownership in Fun. While this is strictly true dilution to our current share ownership is much higher at 25%. This is worked out by dividing current outstanding shares of 133 million by 33 million shares which is what is being given to ABC. Fun has used the calculation of 33/ total after acquisition which is 166 million shares outstanding. 33/166 = 19.8%. Therefore to calculate the fall in EPS I will use 25% reduction in capital base not 19%. I am almost at my tether over this aquisition. I won't be voting, if I keep my shares, for the judica purchase as it only brings in 4 million NPAT. Not to mention it stipulates that a proportion of sales goes straight back to ABC even before Fun gets its hands on it. The only person to win from this situation is ABC. I can only see fun doing well from this, if sales to childcare centres went through the roof due to a massive international expansion. Other wise it is a dud.

 

[scranch]

The Rage,
I share your frustration with FUN.
They need to do some lateral thinking on which direction to take and try and think outside the square.
Trying to get bigger by aquisitions means every time they take over someone,they increase the chance of getting it wrong,as far as I'm concerned.They are supposed to be the biggest toy distributor in Australia,but it doesn't seem to give them any clout,maybe make them more vulnerable.
Maybe a share buy back,and a downsizing may have been the way to go,while they had a re-think on the future.
ABC are certainly the winners with this deal.Beside getting a % on everything they buy,under the agreement,they only paid $5 003 399 for JUDIUS on 4MARCH 2005.In there financial statement they say there is a capital gain,but they don't say it is nearly 40 million dollars.
Either they have added an incredible amount of value over 20 months or the board of FUN is incredibly inept.
One of the concerns playing on my mind was the growth of the playstation and xbox consoles,and games,e.g,1 large expensive gift instead of a few smaller ones.One of the commentaters I looked up mentioned the lack of "screen games"in FUNs range.
Also,just a thought while I was putting this down,WOW and CML both have teams of buyers working in China,maybe to cut out the middle man?
Brian

 

[constable]

Has been a bit of a mover today ! Massive amount of depth compared to last 2 weeks. The only thing of interest was a director buying , but wasn't earth shattering news !

 

[TheRage]

The Rage,
Also,just a thought while I was putting this down,WOW and CML both have teams of buyers working in China,maybe to cut out the middle man?
Brian

Brian I think you have hit the nail on the head. I spoke with Tony Oates the other day and he told me that some of the large toy sellers such as target etal are starting to source their own distribution rights. He told me this was one of the main reasons behind judius purchase as it provided a 5 year gauranteed income stream. Fun still has the rights to several large products but they have already lost radica rights from Matel early this year so maybe this could become a future trend.

 

[scranch]

Moved up to 1.395 last time I looked with volume well over 2 million by memory.Makes it interesting,one of the cmmentators I saw a couplle of weeks ago was reccommending sell over 1.40.
Will still hang on for a while if the div doesn't dip too much.
Only have a bit over 5000 shares.
Thought the buyers might have something to do with it.Last Christmas nearly every toy I looked at was made in China.
Brian.

 

[UMike]

Fun has made an outstanding recouvery eh?

Reached low $1.7's

Must have been more in the deal than meets the eye.

 

[scranch]

Sure you are looking at the right one Mike?
My data says fun had a high of $1.64 yesterday(31.1.07).
Highest for a while was $1.71 in Oct. 06.
Wish you were right,waiting to see how Christmas was for them.
Brian.

 

[UMike]

Sure you are looking at the right one Mike?
My data says fun had a high of $1.64 yesterday(31.1.07).
Highest for a while was $1.71 in Oct. 06.
Wish you were right,waiting to see how Christmas was for them.
Brian.

Positive.
FUN 19/01/2007 $1.71 At close. and hit highs there a few times after.
reached a high of $1.72 on 15/01/2007


I sold a large parcell just before close at $1.67

I still got alot so if it creeps back down it won't hurt as much and may buy some more.

Definately more selling pressure than buying

 

[scranch]

Sorry UMike,
Owe you an apology.I use a program called IC-Investor and have found my data is absolutely corrupted between 10/1/07 and 25/1/07.Every file has the close of the 10th as o,h,l,c,with volume as 0,until 25/1/07 when the data is o.k again.
I will have to email them to find out the cause of the problem.I updated my version from an update disc last week,maybe there was something corrupted during the update.If it had not been for your post I may not have noticed for a while.
Brian.

 

[UMike]

Positive.
FUN 19/01/2007 $1.71 At close. and hit highs there a few times after.
reached a high of $1.72 on 15/01/2007


I sold a large parcell just before close (Today) at $1.67

I still got alot so if it creeps back down it won't hurt as much and may buy some more.

Definately more selling pressure than buying

*edit is in bold.

No worries scranch any info is weclomed.

I sold only to realise a profit having bought the sold amount a few cents cheaper.

 

[UMike]

This one may test $1.78.

5mths on and it $1.78 that it is testing.

I sold a few days prior thinking $1695 was a winning price and I could pick it up a bit cheaper.

Any news on why it has made a spectacular recent rise?

 

[Dutchy3]

Some FUN .... finally.

Shouldn't have too much trouble now accumulating and running up ...

This weeks move has been years in the making and better than average prob of been the signal for a turning point

 

[It's Snake Pliskin]

Some destructive action to occur sub $2.20 ish. Still gives a good profit target though.

 

[Realist]

Good news!!


Funtastic says approached by third party
February 19, 2007 - 10:34AM

Toys company Funtastic Ltd says it has been approached by a third party about a possible takeover.

"The company has received a confidential, preliminary, incomplete and currently unfunded proposal from a third party in relation to a possible transaction which, if implemented, may result in a change of control of the company," it said.

Funtastic said it had only begun to consider the proposal and has had preliminary talks with the party.

"There is no guarantee that these discussions will lead to any agreement being reached with the third partly," it added.

Funtastic was responding to a query from the Australian Securities Exchange about a recent rise in its share price.

 

[TheRage]

Funtastic on the rise due to speculation of takeover. Fun released today it was in discussions with a third party over possibility of buyout. Gee I wonder who that could be. Perhaps it's ABC King Mr Eddie Grove doing a buyout after acquiring 20% of the company through script. I feel sorry for Funtastic shareholders that bought at 2.50 a couple of years back. Not much value will be realised for them.

 

[TheRage]

So it looks like it's not ABC doing the buying but some third party that approached ABC according to the ASX announcement. Strategically Fun is the largest toy distributor in OZ so I can't think of who might be doing the buying. Perhaps a private equity deal. I wouldn't think so though because Fun aren't that attractive at the current Share price as their growth has been suffering due to shrinking margins and distribution rights being bought out or given up. No too mention the effect of issuing the script has had on EPS.

 

[Dutchy3]

Price and Volume confirmation today of my previous post