At a recent AGM of one of Singapore's largest companies, its CEO, in reply to shareholders' concern that the company had bid excessively for a property project in the suburbs, said that the price was "a combined decision" by all three parties in the bid vehicle.
The company has a 60% stake while the two junior partners hold the rest.
That's the dumbest answer to justify winning the bid by 42% above the next nearest bidder!
It's as clear as the tip of one's nose that as the largest stakeholder, the company should have been more cautious.
The smaller players have less to lose and therefore less reason to be conservative with their bets.
In addition to paying the lion's share for the property, the company stands to lose the most should its optimism about the property be misplaced.
Shareholders should have driven home this point to the CEO!
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