Friday, April 15, 2011

Tourism Holdings Takeover: Dont Sell (UPDATE 2)

UPDATE 2: THL shares finished today's trading up 10c to 70c or nearly 17%. This is 2c more than the offer from Ballylinch LP.

Ballylinch LP this morning announced that it intends to make a partial takeover offer to acquire 40.85% of the ordinary shares and redeemable shares in Tourism Holdings Ltd [THL.NZX]that it does not already own. The company currently owns 19.14% of the ordinary shares in THL.

The offer is for 67.5c per ordinary share and this is a 12.5% premium to the closing price on the NZX yesterday.

While the offer is higher than the market price (see one year chart below) and the company has been trading at these low levels because of its poor management and dire results over a number of years, it is opportunistic (and canny of course) of Ballylinch to make an offer for this company when its fortunes are at its lowest ebb in many a year and they are likely after the lions share of THL so they can realise assets that are worth more than the THL share price.

Tourism has been a fickle beast over the last few years and in combo with poor management the share price has obviously suffered. The thing is regardless of its management ills the company is going to see better times in terms of tourist numbers to their businesses and this will eventually reflect in a higher share price as the overall macro situation will get better for them. The 2011 Rugby World Cup should be a boon for THL.

On this basis alone shareholders should soundly reject Ballylinch's offer and hold tight for either a better offer or better times for the company.

Tourism Holdings @ Share Investor

Share Price Alert: Tourism Holdings Ltd
Tourism Holdings worth more broken up
Long Term View: Tourism Holdings Ltd
2011 World Cup Fever

Discuss THL @ Share Investor Forum
Download THL Company Reports

c Share Investor 2011

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