Will Holyman dock with Adsteam Marine?

By Intelligent Investor · 13 Aug 1999

By Intelligent Investor ·
13 Aug 1999

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Adsteam Marine Limited - ADZ

Current price

$2.54 at 00:00 (17 May 2007)

Price at review

$2.44 at (13 August 1999)

All Prices are in AUD ($)

Peter Lynch has observed that, for the investor at least, takeovers are rather pernicious things. A company that has been doing badly starts to turn-around. Its share price starts to run up, in fact, it's doing so well it looks like the stock will double, or even triple its previous lows. Then along comes another company and makes a takeover at a level somewhere above the current share price but maybe only 50% higher than the lows. The offer is successful and the investors miss out on a potentially huge gain.

An example of a gain potentially cut short is the takeover offer, announced on 29 July, for transportation company Holyman Ltd, being made by the tugboat operator Adsteam Marine, which is offering $0.70 cash per share. Holyman shares had enjoyed a steady revival, from a mid-April 1999 low of $0.29 to their late June level of over $0.60. In issue 32 (Speculative Buy - $0.63), we highlighted the fact that the net asset backing of Holyman is at least $0.80.

Holyman worth over a $1.00?

Given the high margins that most of the company's older businesses presently enjoy, as well as the potential efficiency gains from waterfront reform, and the good fit between the companies, the shares are probably worth more. One large institution has stated that the stock is worth $1.00.

The chances are that Adsteam will probably end up paying more for Holyman if it is to acquire it, and until we see how the bid is going to work out, we recommend that, until further notice, subscribers HOLD Adsteam Marine and Holyman shares. Watch closely for further announcements.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

Will Holyman dock with Adsteam Marine?

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Will Holyman dock with Adsteam Marine?

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