Tuesday, October 10, 2006

Ramunia Again

godzilla said: It was speculated that Sime Darby will offer to buy all Ramunia shares, ICULS and Preference at RM1.20 each and .65 for the warrants, translating to RM750mil total value for the whole company. Given that Ramunia makes approx. 25 mil a year, this translates to a pe of 30x. I think this is too rich for Sime Darby... what do you think ?

It is not cheap, but some buyers may pay more for certain reasons. Sime will be able to pay more as Ramunia has the expertise, crew and order s on hand. Sime also knows that it will be able to throw a lot more jobs Ramunia's way, which will make the current purchase price seem not so expensive. The only troubling thing is that M&As such as the rumoured Esso and Ramunia and even Roadbuilder are taking so damn long. Best global practice in M&A activity is to conclude the deal asap. But Malaysians seem to like to dilly-dally. Why is speed a global best practice - it removes uncertainty, it removes excessive speculation, it takes away arbs trying to inject volatility to the share price, it allows companies to move on quickly and plan for the future - just reverse it and you have Malaysia M&A activity style??!!

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