Comvita worth more than independent valuation - directors

Cerebos's $71.6 million takeover bid for Comvita undervalues the honey products company by up to 62%, according to an independent report.

Comvita’s independent directors have today formally rejected the takeover offer from Singapore-listed food group Cerebos, urging shareholders not to sell.

And they say the company is worth more than the independent advisor’s valuation from Grant Samuel, which gave a range of between $100.5 million to $118.0 million or $3.40 – $4.00-a-share.

Cerebos is offering $2.50-a-share for the NZX-listed Comvita, which makes a range of natural health and skincare products from Manuka honey.

Chairman Neil Craig has already labeled the Cerebos bid as "unsolicited, unwelcome, opportunistic” and well below par.

This morning he again urged shareholders not to sell their shares, advising shareholders to disregard the offer.

In their target company statement Comvita’s independent directors said they believed Grant Samuel’s valuation did not fully reflect the growth prospects of Comvita.

“The independent adviser’s valuation range for the shares is lower than the director’s view of the value of Comvita.”

Comvita shares closed yesterday at $2.90.

Comvita’s directors said the valuation multiples used in Grant Samuel’s valuation were “conservative when compared to relevant sale transactions and market trading multiples of similar businesses”.

They said the benefit of strategic initiatives undertaken by the company over the last five years, were not adequately reflected in the independent valuation.

In its report Grant Samuel said its valuation included a premium for control and exceeded the price at which Comvita shares could be expected to trade on the NZX in the absence of a takeover offer.

“As the Cerebos offer of $2.50 per share is below Grant Samuel’s assessed value range for Comvita shares there is no compelling reason to accept the offer.”

The Cerebos offer closed on December 22, unless extended with a 14 day notice period.

Comvita said any shareholders considering selling their shares should wait until the last few days before the offer closes,

“Those that accept the Cerebos offer early will not be able to withdraw and accept a better offer from a third party, should one emerge during the offer period.”

Mr Craig said the company had made substantial progress over the last five years.

“This is not the time to sell your Comvita shares. None of the directors are accepting the offer. If a buyer emerges willing to fully recognise the potential of Comvita, we will assess such an offer and report to shareholders”.