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What Happens When DJ(VBA) Shares Drop To AUD$0.20?  
User currently offlineREALDEAL From , joined Dec 1969, posts, RR:
Posted (5 years 5 months 1 day 16 hours ago) and read 4292 times:

There was a lot of talk around last week when shares where at AUD$0.24, that they were ripe for a takeover.

Now they are at 22 cents from a 12 month high of $1.33.

Seems tob e a lot fo shares being traded, like 6% of all shares everyday.

Is that a lot ?

We're share novices, but surely if someone was to make a takeover bid, they would be buying up as many shares as they could quietly, before they get to threshold (what % is that ?) where they have to announce their intentions to market.

Seems like a good time to buy some shares, but not borrow to do so.

http://djcs.theaustralian.news.com.a...iledquote.asp?symb=vba&sid=1601570

If they go lower, does it mean that takeover more & more likely ?

The talk last week was of a singaporean takeover ?

Or perhaps NZ ?

29 replies: All unread, showing first 25:
 
User currently offlineGemuser From Australia, joined Nov 2003, 5621 posts, RR: 6
Reply 1, posted (5 years 5 months 1 day 16 hours ago) and read 4258 times:



Quoting REALDEAL (Thread starter):
The talk last week was of a singaporean takeover ?

Or perhaps NZ ?

Who knows? Could be SIN, (SQ or not SQ), could be NZ, could even be SRB, what's his cash position like? SRB could mount a take over bid where he offers to buy 30% of all shareholders current holding. That would be within the take over rules and is likely to keep him below the 49% threshold that won't raise questions over VA's nationality. He is currently limited to buying 3% per six months without a takeover bid as his current shareholding of 25% (at least) is over the take over threshold of 19.9%.

Gemuser



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User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 2, posted (5 years 5 months 1 day 15 hours ago) and read 4240 times:
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Rex Aviation is buying Virgin Blue shares:

http://business.smh.com.au/business/...to-takeover-rex-20090218-8azq.html

SMH: ""We purchased a block of Virgin shares,'' he said on Wednesday. "We were hoping that we could take a small strategic interest so we could have some small influence as to the future of Virgin."

Probably not to launch a takeover themselves, but to be a player in any action that transpires.

But - who knows?

mariner



aeternum nauta
User currently offlineQantas787 From , joined Dec 1969, posts, RR:
Reply 3, posted (5 years 5 months 1 day 15 hours ago) and read 4236 times:



Quoting Gemuser (Reply 1):
Who knows? Could be SIN, (SQ or not SQ), could be NZ, could even be SRB, what's his cash position like? SRB could mount a take over bid where he offers to buy 30% of all shareholders current holding. That would be within the take over rules and is likely to keep him below the 49% threshold that won't raise questions over VA's nationality. He is currently limited to buying 3% per six months without a takeover bid as his current shareholding of 25% (at least) is over the take over threshold of 19.9%.

With airlines being such "quality" assets, one wonders why anybody with any sense would touch them.


User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 4, posted (5 years 5 months 1 day 14 hours ago) and read 4186 times:
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Quoting Qantas787 (Reply 3):
With airlines being such "quality" assets, one wonders why anybody with any sense would touch them.

Now might be a good time to look at Virgin Blue. Barring something untoward, I doubt they'll go too much lower and even if they do, they become more and more attractive.

There is surely the possibility of considerable upside as well.

I agree with the people at Rex - Virgin Blue has become a possible takeover target. However, the safer play might be to buy some shares in Rex itself. They are profitable, and their holding in Virgin Blue does not affect that profitability. They also have an (almost) unique niche market, which may, to some extent, be recession proof. For many people in the woop-woop, Rex provides an almost essential service.

So the gambler in me would buy Virgin Blue. The rational trader in me intends to buy a few Rex.

mariner



aeternum nauta
User currently offlineQantas787 From , joined Dec 1969, posts, RR:
Reply 5, posted (5 years 5 months 1 day 14 hours ago) and read 4173 times:



Quoting Mariner (Reply 4):
Now might be a good time to look at Virgin Blue. Barring something untoward, I doubt they'll go too much lower and even if they do, they become more and more attractive.

Notwithstanding my original statement, I think you might be right.


User currently offlineSydscott From Australia, joined Oct 2003, 2930 posts, RR: 20
Reply 6, posted (5 years 5 months 1 day 14 hours ago) and read 4157 times:



Quoting Qantas787 (Reply 5):
Notwithstanding my original statement, I think you might be right.

I wouldn't touch any shares with a barge pole right now. I'd leave your money in the bank!

Quoting REALDEAL (Thread starter):
If they go lower, does it mean that takeover more & more likely ?

A takeover requires a willing buyer. Considering we are in a recessionary cycle with tight credit conditions and that DJ is very exposed to declining consumer demand, falling yields and start up costs for V Australia, i'd say finding a willing buyer would be well nigh impossible. SQ and NZ both have their own problems to deal with, especially NZ, so I'd rule them out for a start.

Quoting REALDEAL (Thread starter):
The talk last week was of a singaporean takeover ?

There has been talk of Rex going after them. I doubt Rex will go for a takeover in the current market.


User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 7, posted (5 years 5 months 1 day 14 hours ago) and read 4144 times:
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Quoting Sydscott (Reply 6):
I wouldn't touch any shares with a barge pole right now. I'd leave your money in the bank!

Each to their own.

The stock market generally probably has some way left to fall, but there are starting to be some very attractively priced individual shares out there.

Quoting Sydscott (Reply 6):
A takeover requires a willing buyer.

The future of Virgin Blue does not rest on a takeover. That A$60 million operating profit they just reported suggests that the base airline is functioning well.

Quoting Sydscott (Reply 6):
I doubt Rex will go for a takeover in the current market.

No, but they're put themselves in a great position if someone else launches a takeover. See post #2 above.

mariner

[Edited 2009-03-03 17:52:48]


aeternum nauta
User currently offlineLufthansa From Christmas Island, joined May 1999, 3204 posts, RR: 10
Reply 8, posted (5 years 5 months 1 day 14 hours ago) and read 4120 times:



Quoting Mariner (Reply 7):

No, but they're put themselves in a great position if someone else launches a takeover. See post #2 above.

Bingo. They either get involved in the deal and included in the new entity, or they get to sell their shares at a nice profit being 'willing' to negotiate friendly with new owners. It may not all be about the sales price either, but other conditions REX may want to influence. (frequent flyer programs, baggage interline, terminal access, joint purchasing...who knows, potentially anything that is involved in running an airline).

I suspect DJ will survive. There's a lot going for it that the media often forget about. Lets not forget the same financial press were stating back in 2001 that DJ would be forced to merge with Ansett for some strange reason. (I never got it, they were making a profit. Ansett wasn't. When you're making a profit and your competitior is not why are you forced to merge with them?). It's about the status que.

The is is of ourcourse VA. The thing is however, if VA is flying empty, QF is going to probably be hurting more too, for the simple reason they've increased their capacity at the same time all this is going on. Nobody is completely out of the woods yet.


User currently offlineSydscott From Australia, joined Oct 2003, 2930 posts, RR: 20
Reply 9, posted (5 years 5 months 1 day 10 hours ago) and read 4012 times:



Quoting Mariner (Reply 7):
The stock market generally probably has some way left to fall, but there are starting to be some very attractively priced individual shares out there.

That may be so. But with confirmed negative growth, no increased profit drivers, decreasing terms of trade and rising unemployment, it's for certain that company profits this year will be lower again come June 30. If good stocks like WOW and QBE have taken hits over the last couple of weeks. Again, I'd leave your money in the bank for now. At least it's protected there.

Quoting Mariner (Reply 7):
The future of Virgin Blue does not rest on a takeover. That A$60 million operating profit they just reported suggests that the base airline is functioning well.

I never said they did and support the notion that they don't need a takeover to survive. With aircraft deferrals and capacity management they'll get through without needing a Partner. The problem they will have is limiting the losses on V Australia so it doesn't drain them of cash.

Quoting Mariner (Reply 7):
No, but they're put themselves in a great position if someone else launches a takeover.

Which is what Rex has said. They've dealt themselves a seat at the table if someone does go for DJ. But the liklihood of that happening, I think, is zero.


User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 10, posted (5 years 5 months 1 day 8 hours ago) and read 3958 times:
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Quoting Sydscott (Reply 9):
Again, I'd leave your money in the bank for now. At least it's protected there.

As I said, each to their own. I enjoy the market and I think there are bargains out there. I've made some money in this climate - and, of course, I've also lost a few quid.

Quoting Sydscott (Reply 9):
They've dealt themselves a seat at the table if someone does go for DJ. But the liklihood of that happening, I think, is zero.

But they do well either way - it doesn't need a takeover offer by someone else.

Since we both agree that Virgin Blue isn't going under, it is highly probable that then share price will go up.

In which case, Rex does well out of their holding, which is one of the reasons why the shares look attractive to me.

I have an affection for small airlines and I think Rex is run by very smart people.

mariner



aeternum nauta
User currently offlineSydscott From Australia, joined Oct 2003, 2930 posts, RR: 20
Reply 11, posted (5 years 5 months 1 day 4 hours ago) and read 3888 times:



Quoting Mariner (Reply 10):
I have an affection for small airlines and I think Rex is run by very smart people.

The problem that I can see for REX is that they have relatively limited growth potential in regional aviation. Smart people I agree with especially since REX is pretty well positioned going into this downturn. But again, coming out of the downturn I don't see the opportunities for them to expand like I do DJ or the QF group.

Quoting Mariner (Reply 10):
Since we both agree that Virgin Blue isn't going under, it is highly probable that then share price will go up.

In which case, Rex does well out of their holding, which is one of the reasons why the shares look attractive to me.

The problem is that there is no impetus for the DJ share price to go up at the moment. Now I agree somewhat that what goes down must, eventually, come back up. But it'll be interesting to see how DJ goes in terms of financing for the next couple of years and whether or not they also need some more capital to help fund V Australia's losses AND to counter falling yields from their domestic trunk network. Even though they were profitable, clearly the market has gone southwards since the last reporting season. QF has today put North America on sale for virtually the entire peak summer period outside of school holidays so I think that's pointing to a fundamental weakness in one of their core markets. However, if that is what is happening at QF even with its AA connections on the other side, I shudder to think what the advance bookings on V are looking like. I honestly think they should abandon either BNE or MEL and focus on either building JNB and breaking the SAA/QF monopoly or finding a place for their 773's on the Kangaroo Route somewhere.


User currently offlineSunriseValley From Canada, joined Jul 2004, 4884 posts, RR: 5
Reply 12, posted (5 years 5 months 1 day 3 hours ago) and read 3867 times:



Quoting Gemuser (Reply 1):
could even be SRB, what's his cash position like?

Virgin Group have big problems finding a large chunk of money for guarantees they have made to hedge funds re V-America as I indicated in another thread. They will find it difficult to raise this money in the present environment. Perhaps they will have to sell something to do it . I can't see them on the buy side.


User currently offlineSunriseValley From Canada, joined Jul 2004, 4884 posts, RR: 5
Reply 13, posted (5 years 5 months 1 day 3 hours ago) and read 3852 times:



Quoting SunriseValley (Reply 12):
Virgin Group have big problems finding a large chunk of money

for those interested below is a link that deals with the subject in detail..

http://www.usatoday.com/travel/flights/2009-02-25-virgin-america_N.htm


User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 14, posted (5 years 5 months 21 hours ago) and read 3778 times:
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Quoting Sydscott (Reply 11):
But again, coming out of the downturn I don't see the opportunities for them to expand like I do DJ or the QF group.

So far, Rex has behaved pretty flawlessly, from near extinction a few years ago to being a profitable and expanding airline.

I could easily dream up a half dozen scenarios for their expansion, but they are clearly creating their own options.

Quoting Sydscott (Reply 11):
The problem is that there is no impetus for the DJ share price to go up at the moment.

I'm not imagining it will go up anytime soon, much of that is market confidence.

Certainly, Virgin Blue needs to make some serious adjustments, and I don't think the cuts they have made are enough - but then I think Qantas may be in the same boat.

I'm not convinced yet that either airline has taken off its market-share-driven cap and put on its revenue-driven cap.

But assuming that Godfrey can keep the airline operationally profitable for the next couple of years and absorb what are bound to be losses on V Australia, then the share price will recover.

All this assumes that that we are close to the bottom of the economic cycle, which may be a big assumption, and also assumes that V Australia can survive - which is not yet, in my mind, a given.

Which is why the gambler in me might buy Virgin Blue shares - but probably won't. The rational trader prefers Rex - and probably will.

mariner



aeternum nauta
User currently offlineREALDEAL From , joined Dec 1969, posts, RR:
Reply 15, posted (5 years 5 months 15 hours ago) and read 3714 times:



Quoting Gemuser (Reply 1):
Quoting REALDEAL (Thread starter):
The talk last week was of a singaporean takeover ?

Or perhaps NZ ?

Who knows? Could be SIN, (SQ or not SQ), could be NZ, could even be SRB, what's his cash position like? SRB could mount a take over bid where he offers to buy 30% of all shareholders current holding. That would be within the take over rules and is likely to keep him below the 49% threshold that won't raise questions over VA's nationality. He is currently limited to buying 3% per six months without a takeover bid as his current shareholding of 25% (at least) is over the take over threshold of 19.9%.

Gemuser

or someone could get friendly parties to buy up lots of small chunks, so no one party has too much, reuiring an announcement ?

Quoting Qantas787 (Reply 3):
Quoting Gemuser (Reply 1):
Who knows? Could be SIN, (SQ or not SQ), could be NZ, could even be SRB, what's his cash position like? SRB could mount a take over bid where he offers to buy 30% of all shareholders current holding. That would be within the take over rules and is likely to keep him below the 49% threshold that won't raise questions over VA's nationality. He is currently limited to buying 3% per six months without a takeover bid as his current shareholding of 25% (at least) is over the take over threshold of 19.9%.


With airlines being such "quality" assets, one wonders why anybody with any sense would touch them.

If you bought a million share at 20 cents & takeover was announced & if was able to sell them at 40 cents, then u could make a quick $200 000 or double your money. Ie lot fo ifs in that but still.

Someone is buying it appears over last few days anyway it appears 5-6% of all the VBA shares out there have changed hands every day.


User currently offlineREALDEAL From , joined Dec 1969, posts, RR:
Reply 16, posted (5 years 5 months 11 hours ago) and read 3666 times:

wow they've fallen again to 20.5 cents.

20 cents is close.


User currently offlineGemuser From Australia, joined Nov 2003, 5621 posts, RR: 6
Reply 17, posted (5 years 5 months 11 hours ago) and read 3652 times:



Quoting REALDEAL (Reply 15):
or someone could get friendly parties to buy up lots of small chunks, so no one party has too much, reuiring an announcement ?

Won't say it never happens, but that would be highly illegal under the take overs code.

Gemuser



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User currently offlineTravelhound From Australia, joined May 2008, 916 posts, RR: 12
Reply 18, posted (5 years 5 months 5 hours ago) and read 3577 times:



Quoting REALDEAL (Thread starter):
Now they are at 22 cents from a 12 month high of $1.33.

I think at 26 cents VBA was trading at half of its market capitalisation.

This could be a result of any or all of the following points:

# The market is pricing in losses that they expect VBA to make in the future.

# There is a fair amount of uncertainty about the viability of the business as a whole (Virgin Blue & V Australia).

# To raise cash VBA may need to sell assets at a discount.

I think their biggest issue in the short term will be maintaining cash reserves.

As Mariner noted the core Virgin Blue business had a profit of $60 million, which at that level should still be producing cash. On the other hand V Australia looks like it could be a real big money pit. I really don't know what they can do (other than looking for a takeover or selling that business) if it struggles.

Going forward, I see VBA being good value if they maintain profitability at Virgin Blue, V Australia's losses are not to great and cash is either maintained or increased over the next six months. If those things don't happen then the only time I would buy would be on takeover rumours.

I would expect the share price to be in a slow decline for the next 3-4 months with the only thing reversing that pattern being good news on any of their businesses (especially V Australia).

If you took V Australia out of the equation, I would think VBA would have a market valuation somewhere around 60 - 80 cents. I think it would also be a pretty stable investment at that price.

Quoting Sydscott (Reply 6):
There has been talk of Rex going after them. I doubt Rex will go for a takeover in the current market.

Rex is an interesting player in all of this. Singapore based investors that I would suggest took a shareholding in Rex because of its strategic value more than anything else.

I wonder if they have a shareholding in ANZ as well?  Smile


User currently offlineREALDEAL From , joined Dec 1969, posts, RR:
Reply 19, posted (5 years 4 months 2 weeks 2 days 16 hours ago) and read 3395 times:

what a rollercoaster !!!

15 cents last week, back to 24 cents.

What's going on with Dj shares ?

http://djcs.theaustralian.news.com.a...ledquote.asp?symb=VBA&sid=1601570#


User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 20, posted (5 years 4 months 2 weeks 2 days 16 hours ago) and read 3390 times:
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Quoting REALDEAL (Reply 19):
What's going on with Dj shares ?

At a wild guess, perhaps investors started reading more than the headlines.

mariner



aeternum nauta
User currently offlineREALDEAL From , joined Dec 1969, posts, RR:
Reply 21, posted (5 years 4 months 2 weeks 2 days 16 hours ago) and read 3380 times:



Quoting Mariner (Reply 20):
Quoting REALDEAL (Reply 19):
What's going on with Dj shares ?


At a wild guess, perhaps investors started reading more than the headlines.

15 cents to 24 cents is a 60% gain in 1 week !!!

Something big is surely going on.

I think a takeover announcement is just around the corner.


User currently offlineMariner From New Zealand, joined Nov 2001, 25013 posts, RR: 85
Reply 22, posted (5 years 4 months 2 weeks 2 days 16 hours ago) and read 3370 times:
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Quoting REALDEAL (Reply 21):
Something big is surely going on.

15 cents was always a silly over-reaction, driven by headlines, and many airline shares around the world have been in an uptrend recently.

If anyone had word of a merger offer, the shares would be a lot more than 24 cents. It's still nothing to write home about.

mariner



aeternum nauta
User currently offlineANstar From United Kingdom, joined Nov 2003, 5176 posts, RR: 6
Reply 23, posted (5 years 4 months 2 weeks 2 days 16 hours ago) and read 3362 times:

And the rest of the market has been rising over th epast week also.

DJ shares are at a very low cost, so even a 2 rise is like 10%....


User currently offlineREALDEAL From , joined Dec 1969, posts, RR:
Reply 24, posted (5 years 4 months 2 weeks 2 days 16 hours ago) and read 3341 times:



Quoting Mariner (Reply 22):
If anyone had word of a merger offer, the shares would be a lot more than 24 cents.

yes but 60% rise in 1 week is pretty damn humunguous !!!

Might be some insider trading going on ?


25 Mariner : Not necessarily. The shares simply fell too low and started to look like a real bargain. They still do. I imagine a lot of traders are piling in. I w
26 Jbernie : Not really... only the percentage is big. Conversely, Google shares can go up/down $16 in a day but percentage wise it is only around 5%. Also, with
27 REALDEAL : trading volume is & has been high(see link) Market cap is only AUD$226M at moment & at 15 cents must have been about AUD$157M - NOT VERY MUCH !!!
28 Post contains links Mariner : Seek and ye shall find. About a week ago, Virgin told the ASX it could not explain the crashing share price. And - much more importantly - confirmed
29 Jbernie : Looking at the charts I would say volume has been high since the US economy got flushed down the toilet, Sept last year it was excessively high volum
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