The market sometimes sends the right signal. When saner, cooler heads
prevail in a highly contested takeover, there’s usually a feeling that
it’s better to be a winning loser than a losing winner.

And that’s been the reaction to the end of the mad, bad scramble for
control of Australian Leisure and Hospitality that went to six bids.

Bruandwo’s final, Everyday Low Price offer of an effective 1c increase
on the Coles Myer-Macquarie offer of $3.75, won the day today when
Coles announced it was withdrawing – check out the official
announcement here.

That brought acceptance from the board of ALH – view that announcement here
– after the Coles withdrawal say a surge of shares into the Bruwando
acceptance facility sufficient to meet the 20% condition, meaning the
higher price will now be paid of $3.76.

Woolies share price opened at $13.59 today and didn’t go any higher.
After Coles withdrew and Woolies was left holding a greatly more
expensive ALH in its shopping basket, the shares went south even
further, reaching the day’s low in the mid afternoon of $13.42.

In contrast Coles Myer shares nudged 3c higher to $9.30 as shareholders voted cautiously in favour of not pursuing ALH.

Of course the spinners at Woolies and their mates at UBS will get busy
peddling a story of a bargain and what a wonderfully tough CEO Roger
is. Yes, many suppliers to Woolies already know that.

It will be just hot air, the proof will be in the returns over the next ten years from this deal.

First off will be the savings from chopping of the board and senior
management at ALH by a vengeful Roger Corbett and gang (including his
Queensland henchman, Bruce Mathieson).

Roger doesn’t like anyone standing up to him, even though he comes
across in public as Mr Nice Guy. In business he’s known as a very hard

Roger was quite dismissive of the management ranks of ALH, and analysts
say an immediate cost saving of $20 to $25 million will be found by
Bruandwo by chopping and cleaning out the ALH head office.

Fosters wins with an extra $53 million for its 10% stake that it was
forced to buy last year in the wake of the poor attempt of a float by
Macquarie Bank.

That stake is now worth just over $130 million, a nice gain and one
that should go to shareholders who were stiffed by the board in the
botched float.

The Fosters board will now no doubt have the hide to snatch this victory from the jaws of their own incompetence.

Perhaps we could ask then again to explain why they are not dunces for
selling ALH like they did last year and giving Macquarie Bank (the new
best friends of Coles) $100 million.

Of course the self interested justification that passed for an
explanation at yesterday’s Fosters annual meeting – read more here – failed to
apologise not for stuffing it up and depriving Fosters shareholders of
valuable cash, but for treating them so arrogantly in the first place.

Remember this collection of clowns (minus Ted Kunkel, now a very former
CEO, but including the present chief, Trevor O ‘Hoy) did sell
something that wasn’t theirs to sell.

ALH was owned by Fosters shareholders. It should have been distributed
to them as a specie payment on a pro rata basis. That way shareholders
would have maintained ownership of their asset, over $100 million would
not have been shuffled off into the Macquarie Bank coffers, and the
present battle (which would have still happened) might have started and
ended in a completely different fashion.

Fosters shareholders were told the company raised $1.4 billion from
selling ALH and its properties. The company turned around and spent
$670 million buying back Fosters shares. For what purpose? The
distribution of ALH shares would have done the job very nicely, and
rewarded shareholders.

Probably the smartest comment came from Chanticleer, in The Australian
Financial Review
(it’s premium so we won’t make you pay) about the
winners and losers in hotly contested takeovers of the past, and by
Stephen Bartholomeusz in the Fairfax media.

Woolies of course has paid $1.01 more than they said they would when
the bid was launched in July through Bruandwo at $2.75. That was then
cut to $2.685 per share when Woolies and Roger said ALH shareholders
could not effectively keep the final 6.5c a share final dividend they
were entitled to.

That effectively made the offer very skinny and ruined any hope that
the initial hardline approach could be converted into a softer, less
hostile offer.

That was to cost Roger and Woolies around $364 million more by today,
possibly the best example in recent years of the added costs of being a
big noting chief executive when a softer, friendly offer would have
saved money. $3.10 was always the price where many big shareholders
would have sold out. That’s a saving of $232 million or thereabouts.
Sure beats Every Day Low Prices at Woolies, doesn’t it.