Note A: today the takeover offer is at a premium to the market price of some 40%. Typically takeover premia are generated by the bidder upping their price or offering a premium in th first place - not by the target falling to bits during the bid.

Note B: a significant literature studying takeover premia over several decades shows that on average the premia achieved in takeovers is in the range 30% - 40%, that the bulk of this remains in the target well after the event, that where there is a drop in price it is in the bidders share price not the target.



Disclosure: A trust I advise is invested in AIAL.

The big issue -

The big issue - where on earth is better value than this going to come from, immediately, at an equally low risk and at such low cost to the company?


1. If the Board believes that the offer is too low, where is the fabled long run value going to come from and why is everyone in the market pricing it wrongly at the moment. Is the market 40% wrong and the Board 40% closer to the true value?

Minor detail

2. Are earnings going to grow by 40%?
3. When?
4. What's currently stopping them?
5. What risks are there around the growth?

Side issues of interest

6. What "strategic advantage" does being a minority in a local authority give one?
7. Ratepayers are involuntary investors with no means of exit here. Is this equitable or clever?
8. How is a bunch of Canadian teachers a strategic threat?
9. Is the PPTA a strategic threat? Why don't they buy an airport or two?

And a risk to consider

10. How will earnings go if the Commerce Commission fixes landing charges?

So here is a chance to export risk to Canada, return some hard earned cash to ratepayers, put some pressure on management --- and get paid 40% over the odds for doing it.

Repeat after me (slowly).... "it is a directors responsibility to enhance shareholders' wealth while managing risk to their investment."