When a bull market is running as hard as ours, it can be difficult for investors to keep up with escalating valuations. The CEOs of would-be predators though have little excuse for failing to understand the price of eggs – it’s what they’re paid millions to do.

Thus the various Queensland Gas and Veda Advantage (nee Baycorp Advantage) takeovers represent a failure of management through lost opportunities for Peter Yates’ Allco Equity Partners and John Ellice-Flint’s Santos.

The SMH is ridiculously kind to Allco in headlining “Bid for Veda a win for Allco”. No – it’s a confirmation of failure.

Allco botched its takeover bid for Baycorp two years ago and finished up with just 17%. Yes, it will make a profit on that 17%, perhaps as much as $40 million, but if Allco had ever understood what it was really doing and had a genuine appreciation of values, it would have had more than 17%. And this is the outfit that’s going to be the biggest shareholder in the privatised Qantas.

Then there’s Santos – a company that increasingly seems to get the odious “unlucky” tag. Yesterday’s totally revised takeover bid for QGC is innovative much more generous and probably rather appealing to the QGC management and board in that it leaves them with a company to play with.

Santos’ failure was not to be innovative and realistic when it first went after the coal seam gas outfit, meaning it’s had to get belatedly serious after finding itself outbid by AGL.

The QGC gas reserves are too important to Santos to be handled in such a way that QGC was p*ssed off and the door was left wide open for AGL.

Peter Fray

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