HK

Dear HK,

It’s a bit difficult to explain it in a text, but I will try.

If you still have questions feel free to call my office and we can schedule a time to discuss this further.

First, it is not an acquisition but a spin-off so effectively nothing should really change much for investors other than the sum of the parts should be more than the whole…in terms of market cap that is…and if it is done right…and the goal would not to spin-off one company to the detriment of the other; that goes without saying.

As a spin-off the company would be more understandable, less confusing, and as such easier to form JV’s with or even purchase all or part of it.  That’s where the acquisition side of the story may have come in.  In my opinion, an acquisition should only be considered if after everything is taken into account the acquisition price is higher than what management considers the npv of owning it…. which would also include the value of redeploying that cash elsewhere. 

Bottom line:  unless the spin off increases shareholder value there is really no reason to do one…again, in my opinion that is.

Hope that helped.

Peter