* * AIRWAYS MERGER TERMS
There is bound to be a good deal of wrangling over the airways merger, scheme, but I think the Government's pro- posals should and will go through. A cash price of 32s. 9d. for ImPerial Airways Li ordinary shares must seem niggardly enough to many holders who bought them at fancy prices between 1933 and 1937, but on the basis of net assets, capital requirements and immediate earnings and dividend possi- bilities the offer looks reasonably fair, and I shall be surprised if shareholders do not accept it. Those who are arguing that the offer is too generous are using some rather odd arguments, of which the oddest is surely. the contention tha because the shares were standing at 25s. 3d. last Novembe —when the merger scheme was first officially mooted—th extra 7s. 6d. now offered is a gift from the taxpayer.
It is nothing of the kind. As everybody ought to know Stock Exchange quotations are never an infallible guide t the real worth of any security and are notoriously unreliabl in cases, such as this, where the ordinary criteria of earning and prospects are difficult to apply without 'special know ledge. If this test of the "proper price" is to be used, wh not go back a little further to 1937 when the market quota- tion was up to 62.s. 6d., or to 1936 when the shares touched 67s. 6d.? On this basis the Government is offering 30s. a share, equivalent to £2,400,000, less than it should. The actual offer, in my view, is a reasonable compromise which, when it becomes effective, should give the new public cor- poration a moderate starting capitalisation. We have already been told that the capital is to take the form of Government- guaranteed fixed interest stocks, but we do not yet know whether, and on what terms, this capital is to be offered to the investor.
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