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I'm always glad when markets start to behave sensibly. And yesterday's shellacking of Fosters Group shares (to the tune of 6.79%) is as rational an act as a market ever performed.
I've said it before - hostile takeovers are a dick thing, and nothing more. The soft-assed sexagenerian white-bread men who run corporations get the biggest burst of testosterone they've experienced since High School, and get all aggressive - with other people's money. And as a result they do stupid things. And having a few parasitic Loki-clones from the merchant wanking industry whispering in their ear doesn't help.
Southcorp's wines are becoming crappier and crappier as their management tries to buy any winery that's got a nice label - so don't be surprised if it all ends up tasting like warm beer regardless of who ends up owning it.
Once a company decides - as a matter of strategy rather than as an outcome of demand - to try and be big rather than trying to be good, the writing is on the wall for their products. Particularly if the product is a "niche" good (like high quality wine, genuine specialist beers, genuinely good cheese - Kraft makes plastic cheese and eventually Southcorp will make wine of equivalent palate). Try to think of a genuine Grand Cru vineyard that's tried to conquer the "Wine Planet"... Latife? Mouton Rothschild? Clos du Vougeot? No, didn't think so. You can't make great wine by the truckload.
Any CEO who embarks upon a hostile takeover does so to the detriment of existing shareholders, and should be stripped of all their emoluments, and fired immediately. Then they should be put in a pillory for folks to throw refuse at them.
History is replete with companies which have been ticking along nicely until the dickhead in charge got a rush of blood to the pants and decided "I must take over my acquisition target or I'll be seeen as a non-completer..."
Ask Carly Fiorina.
