the timing is right for an end of year purchase which will have significant tax benefits as well as a great way to reduce profits on paper with this Capitol cost expenditure.
For a huge company like Teck would the Tax benefits be greater by spending on a buyout at the end of the year or early next year? Or would their quarterly reporting of income nullify the benefit of both scenarios?? I'm not a tax expert. But if somebody could clarify the tax implications....
Teck has huge taxable profits and capital cost expenditures act as a deduction reducing dollar for dollar the amount of income exposed to taxation. So if say Teck spends 3B before year end since they know it's a bill that will be soon - couple of months out at most - then they woud rather benefit from using the tax deduction right away against 2011 income, i.e. benefit right away, rather than wait until January 2012 to spend 3B and not get the deduction for another whole year. Teck's forth quarter ends Dec 31, 2011, so it would make sense to pounce on CF before year-end than waiting until early next year.
However, on the otherhand if Teck plans to buyout using their shares, then they may likely be of the mind that the early-use of the tax benefit is outweighed by the likely higher Teck SP by then. Analyst 12-month target for tck.b is at $65 to $75.
I'd say that if tck.b is only 15% higher in January it would be better to wait till 2012 to pounce than get the tax deduction early
JMHO
