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Anyone fancy a gamble on Flybe?

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IanSmithISA
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Anyone fancy a gamble on Flybe?

#192647

Postby IanSmithISA » January 11th, 2019, 9:05 am

Good morning,

I have been following Flybe for a few years starting when they were around 90p, excited by their maintenance division but disappointed by continuing losses in the flying part of the business.

Today the board recommends a takeover at 1p (one) per share, fortunately I am not holding any shares.

You have to ask what would be the point of accepting such an offer, for all practical purposes it is a total wipe out, the only reason seems to be shareholder sympathy for employees and wanting them to keep their jobs.

So I am seriously considering that it is such a bad offer that is worth buying in the next couple of days on the grounds that the offer will be rejected.

The volumes being traded are surprising large so an expert day trader (not me) could have fun here!

Bye

Ian

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Re: Anyone fancy a gamble on Flybe?

#192650

Postby Wizard » January 11th, 2019, 9:36 am

You are not alone in this thinking, they are still changing hands at over 3p a share.

WickedLester
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Re: Anyone fancy a gamble on Flybe?

#192655

Postby WickedLester » January 11th, 2019, 10:01 am

So I am seriously considering that it is such a bad offer that is worth buying in the next couple of days on the grounds that the offer will be rejected.


But then aren't you reliant on a better offer coming in? Without one the company looks to be on the verge of insolvency. Certainly there's no point accepting the offer when you can get more in the market, but I don't think i'd buy in the hope of a better offer.

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Re: Anyone fancy a gamble on Flybe?

#192657

Postby PeterGray » January 11th, 2019, 10:09 am

No!

Who else is going to bid, and if the board have accepted the offer, after financial advice, it suggests they are not exactly in a strong position to do anything else.

Of course another bid could emerge, but the risk of ending up with 1p (or possibly less) makes a punt here at 3p+ a pretty wild gamble.

IanSmithISA
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Re: Anyone fancy a gamble on Flybe?

#192678

Postby IanSmithISA » January 11th, 2019, 11:08 am

Good morning,

I am not going to go in at 3p as the downside is too great but I am watching and thinking.

I agree that the company is close to insolvency but Flybe have a aircraft service division that made about £3.1 millions last financial year, although about 40% of the revenue came from servicing Flybe planes.

The offer at 1p values the whole business at £2.2million

Certainly there is no obvious reason to believe that there will be a better offer on the table, both Virgin and IAG were talked about as being interested.

The offer being made comes from Stobert (30%) and Virgin (30%) amongst others.

I note that Virgin and Flybe have had some codesharing for a while now and Stobart and Flybe were in discussions in early 2018 but the offer was rejected by the board as being too low as well as Stobart and Flybe already having existing business arrangements.

So only IAG seem to exist as a party that may make an offer.

I also note that the directors have pledged to vote their shares in favour of the deal, I went and looked at the annual report for 2018 to understand the implications of this.

So yes a purchase would be based on the hope that IAG make an offer or the scheme is rejected as grossly undervaluing the business, it is not clear to me how much access IAG have been granted or if they are interested.

Bye

Ian


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