Intelligent Investor

Investors are often dogmatic when it comes to takeovers; we want to see businesses expand their core business and not pursue size for its own sake; we want the price to be low and the quality of the target to be high. In short, investors demand a lot – perhaps too much – from takeovers, which is partly why so many ultimately disappoint. There is one act of corporate cannibalism that makes sense, can be done at a decent price and that involves a high quality target: REA Group, you should take over News Corporation. It may not appear sensible or obvious at first blush but consider that News owns a 61% stake in REA and is currently trading at an attractive discount to valuation. The resulting purchase could be the equivalent of REA buying back a lot of stock at a hefty discount to market prices. News Corp is a messy business with a 50% stake in Foxtel, full ownership of Fox Sports, HarperCollins, the Dow Jones businesses and a suite of international newspapers... Read full article here: (VIEW LINK)


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