Defending hostile bids

[cccs]

If it's such a whiz bang idea why do some plcs decide to a sale and leaseback of property assets and a return of cash to shareholders when they want to fend off a hostile takeover.

I know Lookers is considering the tactic to fend off Pendragon and others have used it/ considered it.

Is it just a tactic to preserve the jobs of the directors of the company under attack. If it's such a good idea why haven't they done it long before any approach?

[Jubal]

You gotta keep them shareholders sweet somehow!

[bermyandy]

Sale and leasebacks are a great way of getting hold of cash, but by selling the assets in the business, you can reduce the value.

It wont have been done in the past as while it hands cash to the shareholders, its cash than can pretty much come off the value of the business, as you are effectively disposing of assets.

Its useful on a hostile takeover as the lack of asset backing in the company makes it less attractive for potential purchasers.

[flyingjase]

I think the spin is that it allows them to focus on their core business, and not be a property landlord. Whilst increasing dividend also tends to rais share price and make a hostile bid more expensive (read difficult and not cost effective)

In my view it's short termisim at it's best, but what do I know??!!