Company Changing Events?

Last week Qube submitted a formal proposal to acquire national rail freight and cargo port Operator Asciano for A$9billion, which is being touted as a company changing acquisition that will make the smaller company Australia’s leading logistics provider. Company changing events are typically major acquisitions or significant new investments requiring equity or debt issues, designed to dramatically boost earnings or change market perceptions of a company, both of which should be beneficial for shareholders. Whilst the valuation or market capitalisation of a company listed on the ASX can vary dramatically with market sentiment, in reality a company’s core business normally changes quite slowly and often the company-changing investment designed to buy growth can actually be very negative. In this piece we are going to look at recent company changing events from major purchases to significant investments, the entering of new markets that were both positive and negative for shareholders. (source: Hugh Dive, Senior Portfolio Manager, Aurora Funds Management)