没想到，如今在马来西亚；真的有人肯花大钱去买一间“面临破产”的美国上市公司。
Empire Resorts to be acquired by controlling holder Lim ~ 20 Aug 2019
https://www.theedgemarkets.com/article/empire-resorts-be-acquired-controlling-holder-lim
Britain's biggest tech firm Micro Focus sees £1bn wiped off value as shares slump 30% after it slashes sales forecast ~ 29 Aug 2019
https://www.thisismoney.co.uk/money/markets/article-7406299/Britains-biggest-tech-group-Micro-Focus-sees-1bn-wiped-value.html
Micro Focus, which is based in Newbury, has struggled to integrate the much larger US-based Hewlett Packard Enterprise, which it snapped up for £6.8 billion two years ago.Micro Focus shares drop by a quarter following profits warning ~ 29 Aug 2019
https://www.theinquirer.net/inquirer/news/3080977/micro-focus-profit-warning
- The main problem is the chronic indigestion the company is suffering as a result of its merger with HPE Software, an operation described by HPE as a ‘spin-merge'.
- That saw HPE stockholders receiving the wondrous gift of shares in Micro Focus amounting to 50.1% of the company. At the time, HPE described it as "$8.8 billion in value". It's now worth a lot less than that.
- The deal promoted Micro Focus to the FTSE-100 and bumped up the company's revenues from a mere $1.38bn in 2017, before completion of the deal in September 2017, to $3.2bn in the year to the end of March 2018.
Are mergers and acquisitions always good for investors?By Royston Yang
31 January 2019
There's nothing which graces the headlines and makes business news more exciting than mergers and acquisition (M&A) announcements.
With the desire to grow larger and get better, more and more companies are on an acquisition spree to turbo-charge their growth and to create more "shareholder value". Investors who are on the receiving end of such announcements from the companies within their portfolio should carefully scrutinise the deals as M&A do not always turn out well. The devil, as they say, is in the details and this article attempts to explain the good and the bad when it comes to M&A.
The Lowdown On M&ACompanies undertake M&A for a variety of reasons, from the need to integrate a new product line or lines (buying instead of building one shortens the process), acquiring a new complementary set of customers, diversifying away from their core business or simply adding on to their existing capabilities. Whatever the reasons, investors should look at several aspects to ascertain if the transactions are good or bad.
- Price paid and valuation – What was the total amount of money paid for the deal? Did the company over-pay or are they getting a good deal? It’s important to drill down into the valuation paid and not just look at the headline number. For example, if the acquisition costs $100 million and the acquired company generates $10 million in net profit each year, this means the acquisition was made at 10x earnings, which is considered cheap. The rule of thumb is anything above 15x earnings would be considered “expensive”, though of course, this varies according to the industry.
- Supposed benefits – Look at what management communicates to shareholders regarding the benefits of the M&A. Does it result in better earnings visibility, wider customer base or product portfolio or some other tangible benefit? Be careful of general terms such as “synergies” which do not provide specific details on how the M&A will benefit the acquirer.
- Funding for the acquisition – How is the acquisition funded? Using the company’s internal resources and based off free cash flow generation, or via a higher level of borrowings? This is important as it demonstrates if management may be biting off more than they can chew. The infamous leveraged buy-outs in the late 1990s, where companies borrowed aggressively to fund expensive acquisitions, turned out to be a grave mistake as many of these M&A subsequently fared poorly.
Assessing And Monitoring M&AAs investors, I believe we should continue to monitor and assess if the M&A performed well over time, to decide on whether the company had made a good or poor acquisition. Study the disclosures made of the new division or acquisition (assuming the company discloses such numbers) to determine if it is performing well or poorly. The time horizon should be anything from one year to three years, so this can be a long-drawn process.
The Foolish Bottom LineM&A can be complex, and it’s not easy for the investor to assess if an M&A is good or bad unless he monitors it. A company may also have a track record of successful M&A which an investor can rely on for psychological comfort. The bottom line is that M&As are not always beneficial, and the investor should be aware of this.
