DE-LISTING: PAPER BEAT STEEL?

By Urs M. Dür

In the United States, and other English speaking nations, there is a game called “Rock, Paper, Scissors” whereby verdicts are reached between adversaries in a dispute on the playground basis who picks the stronger of the choices spontaneously. For example, “rock” beats “scissors” and “scissors” beat “paper”. Pick correctly on a given chance and you win the decision. Yet there is a main fault to this game in that there is no incentive to choose “paper” because it is always the weakest option in the game. Or is it? Children debate that paper often has more power than rock, akin to the argument that “the pen is mightier than the sword”, etcetera.

In these heady days of potential tanker IPO’s, we see equity being attractive to certain owners and conversely, in the last 12 months we have seen some examples of majority owners and large shareholders giving up the public dream and taking their company private, de-listing. Some of these take-overs/de-listings have been completed below Net Asset Value. For the investor, paper beats steel, if not rock, on these occasions.

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