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+--- Thread: Sell Down or Buyout? (/showthread.php?tid=2652)
RE: Sell Down or Buyout? - Libtardius Maximus - 01-26-2013
No one here should discount Shell in this scenario. Recall CV's comments about "white knight" back in Aug-September 2012.
RE: Sell Down or Buyout? - MRP - 01-26-2013
If a super-major wanted to acquire all of IOC and thought it could do a deal for 35% of Elk/Antelope at $1.50 or $2.00/mcf why wouldn't it? Its likely that the end deal will include some portion of upfront cash as well as the new partner carrying part (or all) of IOC's project costs going forward. If the upfront portion is $500m, wouldn't that be an effective investment to make so as to make sure you don't get into a bidding war with other oil co's since once half of IOC's elk/antelope holdings is committed to a partner the whole company becomes less attractive to another buyer?
The poison pill helps to prevent a hostile bidder from buying more than 20% of the stock but if holders of >50% of the stock ever decided they were open to an offer the poison pill would not be helpful.
I have been a holder of this for 6 years now and followed the company before that and I am eagerly looking forward to seeing where this partnering process turns out. There are certainly alot of moving pieces.
RE: Sell Down or Buyout? - Palm - 01-26-2013
'oilmd9' pid='16593' datel Wrote:Anyone know Carl Icahn? We could tell him Ackman is short IOC.
Ha! Best idea of the day; look what's happened with Herbalife and Netflix since Carl jumped in!
RE: Sell Down or Buyout? - sfiaes - 01-26-2013
Nice post Petrengr,
I share your sentiments and conclusions.
One other thing to consider: Think how quickly the SM could reimburse itself by selling off interests in the LNG project going forward.
If I am responsible for acquisitions at a SM and I have not presented what is essentially an arbitrage opportunity to the board, I'd be in fear of losing my job.
RE: Sell Down or Buyout? - Hoosier1 - 01-26-2013
Just a reminder to all that the company (Collin) clearly stated they were looking at "multiples of the current share price"
Obviously that means the bidders are aware of the additional resources and its subsequent value... doesn't it?
RE: Sell Down or Buyout? - jft310 - 01-26-2013
Problem with the logic of buyout is the Company must be willing to sell at the offered price. Look at Cove up 400 percent. The top ten shareholders will not vote to sell all of IOC at 100-200 percent of the current price. That's 70 pet cent of the shareholders. Therefore needs a hostile bid and IOC has a poison pill that prevents that. Will happen above $ 20 billon market cap that's the Mitsui contract price. When ??? That's the question???IOC will be in play post selection of the winning bid. Right idea wrong price. Direct from them to you now.
RE: Sell Down or Buyout? - Palm - 01-26-2013
'petrengr1' pid='16583' datel Wrote:
I am a Super-Major. Let me see if I can understand why I should buy an interest in the Elk/Antelope Field instead of buying IOC.
IOC has a market cap of about 48 million shares x $61 or let’s just call it $3 billion. Most companies can be bought for a premium 50-75%. If I paid a 100% premium it would cost me $6 billion. If I paid 200% premium it would cost me $9 Billion. Let’s say Elk/Antelope Field contains 9 TCF and IOC own 58% or 5.22 TCF. At $6 billion I would be paying $1.15/MCF for the gas and at $9 Billion I would be paying $1.73/MCF. If I could buy the company for $9 Billion I would own 58% of Elk/Antelope (PRL15) or 5.22 TCF plus Triceratops and all of the 40+ prospects in PPL 236, PPL 237 and PPL 238 plus the refinery and marketing.
IOC would like to sell me a 35% interest in Elk/Antelope. If I buy 35% of 9 TCF I will own 3.15 TCF at Elk/Antelope plus anything else I can find in PRL 15. In the bidding process I am probably going to have to pay as much as $2/MCF (or more) for this gas or about $6.3 Billion for the 3.15 TCF.
Would I be better off to pay $6.3 Billion for 3.15 TCF or $6 Billion for 5.22 TCF, Triceratops, all of the license areas including 40+ prospects and the refinery and marketing?
After having all of my financial experts think this over I have decided it would be better to offer IOC a 100% premium for the whole company. This may start a bidding war but it looks like I can afford to raise my bid at least to a 200% premium and still come out better off than buying an interest in Elk/Antelope only (PRL15) since I know for sure there is quite a bit of gas at Triceratops and a very good chance of finding more in the other 40+ prospects.
I hope this works out well for me!
Interesting thoughts Pet, and something we have kicked around at various times. A couple of questions:
1. Does your /mcf price consider just the gas ("for the gas"
or does it include the condensates as far as real value?
2. The stated premiums have been a bone of contention several times as far as a debate on whether a SM might be "encouraging" the push down of IOC's pps for the purpose of a buyout. Premiums on buyouts vary greatly depending on the economy and stock market valuation levels. Today we sit at near record highs which tend to reduce premiums paid because companies are considered more fully valued. As retail investors gain confidence and re-enter the stock market after being on the sidelines for so long we are seeing higher and higher markets. When will it end? Who knows? But this is when bubbles begin to form as well as corrections. So if I am that SM my thinking would be to strike very soon for a buyout because I might be able to reason a smaller premium as an initial offer because of the markets being high right now. Might be able to steal the company if others do not follow. If others do join, then I can up my bid. These guys will likely not throw out a 50-75% premium right out of the gate while the market is heating up.
RE: Sell Down or Buyout? - davidhmtk - 01-26-2013
'oilmd9' pid='16593' datel Wrote:Anyone know Carl Icahn? We could tell him Ackman is short IOC.
That was a good show. If Ackman were short, I could probably get something in front of Icahn, I know someone who is close to him.
RE: Sell Down or Buyout? - johnwgrant - 01-26-2013
BTW, the lever/option a Super-Major has is they can offer part of their purchase price in Company Stock...
As some have mentioned before: They would take 3 shares of CVX stock for 2 shares of IOC...
There are tax advantages too for us shareholders: in a stock swap, we can elect to defer the capital gains by not selling the stock received until a future tax year....
RE: Sell Down or Buyout? - Gator - 01-26-2013
(01-26-2013, 06:29 AM)davidhmtk Wrote:
(01-26-2013, 04:43 AM)oilmd9 Wrote: Anyone know Carl Icahn? We could tell him Ackman is short IOC.That was a good show. If Ackman were short, I could probably get something in front of Icahn, I know someone who is close to him.
Get him to sell his CHK and buy IOC. Go Global with his gas play. The again, IEP is doing quite well this year, so he might not listen to anybody right now.