Ata Goes Binding in its Tilt for Universal Coal

Luke Cummings

Ata Resources returned to Universal Coal (UNV.ASX) last week, not only stepping up its offer to binding (something we always love to see) but also provided colour around its ability to finance its proposal. The message was clear; the intent to acquire the business is real and Ata is willing... Show More

MYOB’s Private Equity Reunion Party

Luke Cummings

With a headline value of just under $2.2b, investors awoke to news on Monday morning that accounting software provider MYOB Group Limited (MYO.ASX) had yet again attracted the interests of a private equity group; KKR & Co had submitted an initial non-binding proposal at $3.70 per share having lightened Bain... Show More

Universal Coal is in Play

Luke Cummings

Yesterday morning, Universal Coal (UNV.ASX) announced receipt of an indicative, non-binding acquisition proposal at $0.35 per share from Ata Resources Pty Ltd. Given the conditional non-binding nature of the bid, it is not quite yet the asymmetric arbitrage opportunity that we would normally trade with conviction. Somewhat fortunately for us... Show More

Could Fairfax Media See a Bidding War?

Luke Cummings

Regular readers of Livewire may recall some of our previous comments on Fairfax Media early last year, then subject to multiple private equity bids from both a TPG consortium and Hellman & Friedman. Last week, the market awoke to news of a Nine Entertainment (NEC.ASX) and Fairfax Media (FXJ.ASX) merger... Show More

M&A activity is heating up…

Luke Cummings

Following on from the recently announced takeover offers for Mantra Group Limited (MTR) and Property Group Limited (PLG) and so too the current tussle for control of Asia Pacific Data Centres (AJD), we thought it was worth revisiting what we look for when trading opportunities in the merger arbitrage space... Show More

Closing the door on Fairfax

Luke Cummings

Livewire readers may recall two previous articles that I wrote a few weeks back covering the details of the (then current) takeover approaches made to Fairfax Media by two private equity firms that were interested intaking Fairfax private. If not, you can find them here and here. Show More

Is your investment manager’s strategy sustainable (part two)?

Luke Cummings

Yesterday, in part one of this series, we discussed the importance of conducting due diligence on the strategy and process your investment manager. Apart from the initial investigative work, it also helps to know whether the manager is doing something genuinely different from others. After all, if your fund manager... Show More

Is your investment manager’s strategy sustainable (part one)?

Luke Cummings

Considering the strategy of an investment manager, which is essentially their investment approach and process, is a crucial element when assessing a fund manager, and one which is often underemphasised. While returns can and will fluctuate over time - and hence chasing past returns is a poor manager selection approach... Show More

Is it time to reconsider the 80:20 rule before it gets trumped?

Luke Cummings

Prudent portfolio management shouldn’t rely upon the assumption that everything will remain the same or that economic settings of the past will continue. Unfortunately, this is how many portfolios in Australia are typically managed. This is particularly dangerous when one considers that current economic settings are quite different to what... Show More

Merger Arb: The ‘right’ way and the ‘wrong’ way

Luke Cummings

At Harvest Lane, one of our core strategies involves taking a position in stocks that are subject to a takeover (also known as Merger Arb) and/or some other type of corporate activity. If the right opportunities are selected, this strategy produces limited downside volatility of returns, exhibits low correlation with... Show More

Hi Carlos, Thank you for taking the time to offer your thoughts. The first point I think should be necessary to make is that we’re not passing judgement on who should or shouldn't own Healthscope (or any other companies for that matter). We manage a market neutral fund that specialises in trading 'events' (including M&A) and hence our analysis of the situation is based solely on the likelihood of the current offer succeeding and/or the likelihood of the offer terms being improved. For this reason, we are very much focused on the ‘short term’ and whilst we appreciate this approach is not for everyone, it has generally served our investors well. In the case of Healthscope specifically, we would note that the transfer of ownership does not necessarily mean that the underlying assets disappear, evidenced by the fact that Healthscope had been previously owned by private equity before returning to public markets in 2014. The inclusion of Australian Super in the bidding consortium (who would most likely have a very long-term investment horizon) indicates to us that BGH are very much taking a view to the long term with their offer. Of course, at this stage the BGH/Australian Super consortium are yet to even be granted due diligence access, let alone make a binding offer so, the situation has some way to play out yet. Luke

On Healthscope talk of the town again -