The raider would then engage in the short selling of the target's shares to ensure that the market value of the company was below its asset value or breakup value
. The raider would then quickly and quietly start buying shares early in the morning to gain a controlling interest.
The formula was that they would pay up to the breakup value
of the dock, which is what it would cost them to remove the dock," he said.
Raymond James analyst Pavel Molchanov said Occidental Petroleum could follow Hess's lead and separate its substantial chemical, midstream segments from its exploration and production portfolio to deliver "breakup value
Similarly, another food processor dismantled its entire processing line and offered each piece of equipment for sale online individually, banking that the breakup value
would exceed that of the entire system and attract more potential buyers.
The present study includes five tables on Top 100 companies according to sales, Networth, Breakup value
, Pre tax Profit to Networth and Earning per Share.
Private equity players looking at the auto industry in Detroit, for instance, may be looking at breakup value
, says Thomas Gordy, managing director of CM & D Capital Advisors LLC in Detroit, a firm that provides financial advisory, capital-raising, and restructuring services.
"What you are seeing are investors looking at what a company is worth on a breakup value
," he said.
Despite its recent share price recovery, analysts put the likely breakup value
at up to three times its current 8 3 4p market price.
The net asset base of the company increased by 11% from $11,599,640 to $12,926,174 which gives the company a breakup value
in excess of $.80 per share.
Its shares - which are trading at around nine per cent lower than the fund's breakup value
- have shot up from 230p in March to 257p yesterday.
Value stocks, when beaten down as they are now, are volatile but the possibility of further large downside movements is limited by breakup value
and even cash value.
Analysts think that the company is trading below its breakup value
because PCS is doing so well relative to McKesson's low-margin drug distribution business, its bottled water division and its Armor All Products Corp.