Business journalism is generally a polite affair, even if the ABC’s finance host Alan Kohler told the AIRC yesterday that Kerry O”Brien sometimes goes “completely berserk” when things don’t work out at The 7.30 Report.
But the News Ltd attack dog Terry McCrann is an exception to the rule as he takes every opportunity to attack rivals, analysts, institutions and boards for not sharing his completely black and white view of the world.
And so it was today when McCrann felt vindicated by yesterday’s 13c rise in the Virgin Blue share price to $2.03 and had a whack at the “experts” (Crikey included but not named) who got it wrong in predicting Virgin shares would slide after Patrick Corp’s $1.90-a-share offer closed on Friday. The stock is down 5c to $1.98 in early trade today.
McCrann ran all these questionable numbers about how much Patrick has made – “an extra $160 million on its original 45.5% stake” – when most observers agree that a free float of just 9% means that future Virgin Blue trading won’t be very meaningful and yesterday’s bounce was merely because a few hedge funds got caught short.
What McCrann failed to point out, however, is that shares in Patrick Corp have been under pressure because many in the market are uncomfortable with its increased $1 billion exposure to Virgin Blue when the airline business is getting particularly tough. Patrick shares fell 6c to a new four-month low of $5.81 yesterday and lost another 3c to $5.78 in early trade today. Since announcing the takeover in late January that saw it splash $336 million on an extra 16.9 per cent stake, the value of Patrick has fallen $556 million – a hefty 12.23% given the stock was at $6.62 before the bid was lauched – to $3.99 billion.
Somehow this value-destroying takeover makes Chris Corrigan a vindicated guru, according to McCrann, who certainly has form when it comes to making premature claims about the wisdom of his favourite business heavyweights. In February 2003, he penned a column claiming that Solly Lew “saved himself at least $20 million by renting instead of buying the shares he used in his desperate battle to stay on the Coles Myer board”.
This was based on the fact that Solly rented the shares at $6.30 and they had fallen to $5.80 a few weeks after he lost the boardroom battle. McCrann has never returned to the theme as Coles Myer shares subsequently took off. If Solly had bought rather than rented the 45 million shares in question he would today be worth $135 million as Coles Myer shares yesterday close at $9.30. The wisdom of Solomon, eh Terry.
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McCrann has sent some celebrated sprays through to Crikey, including this effort which opened by calling Crikey “a complete f*ck”, so we await his considered and lengthy response to this item in the coming days.