Macquarie Group Limited (MQG) Jumps 12%+ intra-day
While I don’t normally comment on daily news, the 12%+ jump in Macquarie’s share price intra-day caught my eye. MQG opened down 74 cents at 24.26 and then jumped suddenly at around 1.24pm, MQG last traded at $27.40.
It seems this takeover announcement for Macquarie Communications Infrastructure Group (MCG) sparked the rally. Cash is king and it seems investors are now seeing the kings clothing. As the phrase says, when the tide goes out we’ll see who is naked and it appears Mac has been wearing speedos after all.
The bid from Canada Pension Plan Investment Board (CPPIB) has been approved by the board.
With 304,463,618 shares on issue as of September 2008 the $3+ jump in share price equates to $0.9B+ in increased market capitalisation for MQG. “The A$2.50 offer price values the equity of MCG at A$1.37bn and implies an enterprise value at A$7.3bn” Macquarie’s cut of the pie is much smaller, my rough reading is they get $250m from their 18.3% ownership and an extra $56.5m plus $4m a year for ten years via an ancillary transaction.
That ancillary transaction is great for MQG shareholders, but does it represent a two tiered offer?
$2.50 for the stapled security holders and $2.50 plus $56.5m plus $27m ( net present value of $4M a year for ten) for Macquarie. In dollar terms Macquarie’s cut appears to be $3.33. That’s a 33% premium for MQG.
These are my rough calculation, please feel free to chip in a correction. I’m simply asking a question and as I’m long MQG have no complaints.
The ancillary transaction is legally for the management entity, but if CPPIB buy all the securities they don’t actually require the management entity. They may have to buy MCIML due to trust or other legal documents, but surely this represents yet another skim by MQG at the cost of holders.
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