What an interesting judgement the market will have to make when trading resumes in Fairfax shares: Have Ron Walker and David Kirk just made the company a little too big to swallow, or have they merely fattened the calf, providing more cuts for the predators to feast upon in the eventual carve-up?

The $9 billion enterprise value spruiked by the Fairfax camp requires a larger mouth for the initial swallow, a little distension of the jaws perhaps, but the various takeover scenarios all expect a subsequent dismembering anyway.

Packer, Murdoch and Stokes might not be allowed to collude on a bid, but if any of them could trust the others enough to deal reasonable afterwards… well, all manner of things remain possible.

The $9 billion is a bigger stretch, but Kerry Stokes’ Seven has a lazy $3 billion sitting in the bank and a world awash with cash desperate to lend more to him. The gearing required to buy and sit on all of Fairfax/Rural Press would be a worry, which could make Stokes more willing to trade with PBL and News Corp.

That’s something he hasn’t been able to do successfully when it comes to Aussie Rules games and Packer and Murdoch wear their Foxtel hats – or perhaps that’s just one more chip in an ever-growing poker game.

The Fairfax takeover of Rural Press is a nice defensive by the Walker and Kirk team, but it doesn’t make Fort Fairfax impregnable.

Watch the way the smart money votes when the shares settle down upon relisting for a gauge of just how thick the walls might be. A sharp fall in the Fairfax price means the market reckons the game is off. Maintenance of the price or a rise means this is just another hand in a long session.

And as a footnote, someone should ask Helen Coonan when a flurry becomes a flood.

Peter Fray

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