Arborbridge wrote:In general, I've never quite understood why companies sell off "good bits" of themselves, unless there are some cracking ideas for developing some other part of the business. It's a moot point whether that often happens or whether it is just some executive money making procedure.
If the market values something at say £2, and somebody comes along and offers £3 for it, why wouldn't you at least consider it? That's called acting in the shareholders best interests. It doesn't matter if that's "family silver" or "family brass", or whatever. The corporate activity is outing value.
Now even if capital is a secondary consideration, if that £2 is providing an income of say 10p, or a 5% yield, and someone offers you £3 that you could re-invest elsewhere at 5% (or even 4%!) you get a chance to increase your income from 10p to 15p (or 12p). Odd that a strategy that is looking for growing income doesn't embrace the chance to do just that.
I haven't looked at the details of this particular case, but that's why companies (and their shareholders agree) sell off their assets, even if they are "good bits".
Seems like we are back to the usual differences between us, as the other day.
If you have an asset which is making the money roll in, and in, and in - I see no reason to sell it for a trifling uplift in the price. That is, I might do that, if there was some cracking project I could reinvest in, but I've not heard mention of it.
Like all takeovers, it is regarded as "in the interests of shareholders" if there is a premium to the price: that's true if the object of shareholders is just to out an asset value. With that argument, we could in principle, end up with no stock market investments at all, and then the question is whether the pseudo income released is sufficient to one's needs for ever and a day.
Still, the conversation you have initiated will lead to an OT discussion if we go further, so I will end there. Just to say, I buy shares for the income as do all HYPers, and if the assets are worth more, that's fine, but I'm not in the habit of selling - I prefer continued income generation. As mentioned in this thread: if you sell, you need to find somewhere as good or better for the funds to justify doing so.
I doubt many HYPers would agree with your POV.