Probably because of a general perception of these stocks as "best of class" in their respective sectors and offering steady growth at relatively low risk.
I don't hold either, although I watchlist QBE, but I can see the appeal for many investors.
Agree. Plenty of much more profitable stocks than WDC.
But for some unfathomable reason it - along with QBE - always seems to get included in basic portfolios.
Probably split the development arm from the landlord armsand have two listed companies
1. Westfield Construction.
2. Westfield Retail.
Is the SP value of WDC going to go down because of this? since 50% of au/nz retail is going towards it.
From my understanding the new trust "westfield retail" is going to take 50% of the ownership of westfield groups Australian and newzealand properties.
This will leave westfield group with the remaining 50% of australian and newzealand properties + the usa properties + UK properties + management rights + development operations.
5:29 in the video - that brings back memories of Toombuls old glory days and the iconic T sign - I can't believe the council allowed them to take it down. For a long time Toombul was heaps more popular and bigger than Chermside. How times change.
Fund managers and analysts told The Australian it was a sophisticated capital rearranging exercise, offering "marginal benefits" to investors. "They are not buying or selling any assets. But they are shifting capital from one vehicle to another and in the process incurring $200 million in costs," said fund manager Winston Sammut of Maxim Asset Management.
A substantial investor said: "The benefit to unitholders is marginal. We will be offered entry into a business offering low a return on equity. This deal is not a company-making deal. It is just a way of getting another capital partner for the group."
The expressed purpose of the split is to close the gap in value between Westfield Group and its peers, which are trading at higher multiples. But investors remained uncertain that Westfield would be able to achieve this.
An analyst said: "To me this is step one. There will be more moves involving other parts of the business. Otherwise, why would it go through all this trouble for something that is not that compelling?"
Others raised the question of why the group would go through the trouble of the 2004 merger of the three trusts to create a large group -- only to unravel it in 2010.
SKC given that the current company is a combination of "growth" overseas assets and comparatively more safe and stable Australian and New Zealand assets, I can see exactly where the value comes into play. You now have the option of buying into the more income stream type Westfield Retail, which is going to be more stable debt wise etc, than the current Westfield Group.
Thus each company will appeal to different investors, in theory increasing the MC of the combined company compared to the previous structure. It's a bit of a stretch but I guess it works in theory, and I don't hold any shares so no worries from me personally. Obviously if you hold it'll be more of a major issue.
I agree there aren't many discounts or benefits to existing holders, but that's just the way the company has structured the deal.
It's not looking good at the moment.QUOTE]
Thats a matter of opinion? I happen to prefer lower share prices. Infact I see stockmarket surges like we have been experiancing as an annoyance.
When deciding whether something looks good or not you should be looking at the underlying business itself, not the price action of the stock in isolation.
I would suggest that a business that is winning on multiple fronts with a depressed stock price looks very good,
I know what the thoery says
Supposedly the market doesn't like conglomerates or companies that combine different businesses. Supposedly diversification is best undertaken by individual investors rather than company executives. And the market dislike that so much, that there is often a discount applied to those parts which would otherwise be valued higher if they are separate.
What I fail to see is a clear rationale behind the split in terms of value creation, given that we didn't know if, or by how much, the market was discounting WDC holding assets that require different leverage and ROE etc.
Based on comparable companies I'd say there wasn't much discount in WDC's share price, and hence there was nothing to "unlock" by splitting. The value lost however was obvious with all the fees to the banks and the additional CEO/board remunerations for the new trust.
We will soon find out what the combined share price for the two companies will be...
I actaully have a short position on WDC before it went into the halt so that's probably why I am slightly cynical...
They wanted to raise capital to fund their development pipeline and felt that a trust with purely Australian assets would be more attractive to Australian investors.Personally I can't see how the argument for them to be sperated now is better than the argument for them to be joined years back. Sounds like a money spinner for the consultants.
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