SINGAPORE - The independent financial adviser (IFA) for mainboard-listed Indofood Agri Resources (IndoAgri) said Indomie maker Indofood Sukses Makmur's latest buyout offer of 32.75 cents per share for the company is "not fair but reasonable".
Novus Corporate Finance had similarly said that the previous offer of 28 cents per share was "not fair but reasonable".
The IFA has advised the recommending directors to recommend that shareholders accept the offer, unless shareholders are able to obtain a price higher than the final offer price on the open market.
It said the buyout offer is "not fair" as the new offer price still represents a steep 59 per cent discount to IndoAgri's unaudited net asset value (NAV) per share of 79.8 cents as at March 31.
Indofood Agri's EV/Ebitda ratio (enterprise value to earnings before interest, taxes, depreciation and amortisation) is below the mean EV/Ebitda ratio, but above the median EV/Ebitda ratio of comparable companies.
Novus added that the EV/hectare of the group, as implied by the final offer price, is significantly below the mean and median EV/hectare of comparable companies.
The implied price to net asset value (P/NAV) ratio of IndoAgri is significantly below the mean and median P/NAV ratios of comparable companies, added the IFA.
Novus said the offer is "reasonable" as the group's gross profits and gross profit margins had declined from FY2016 to FY2018, and from Q1 2018 to Q1 2019.
Net profits and net profit margins had also decreased from FY2016 to FY2017, swinging into a net loss and a net loss margin for FY2018 and Q1 2019.
The IFA cited various comparisons to show that the final offer price was a premium price for shareholders.
One comparison was that the final offer price represents a significant premium over the volume-weighted average prices of the shares for each of the one-year, six-month, three-month and one-month periods prior to and including the last trading day of April 5.
During the period commencing one year prior to the last trading day and ending on the latest practicable date, except for April 11, 2018, the closing price of IndoAgri had not reached or exceeded the final offer price, Novus said.
The group's operating performance was also worse compared with comparable companies. It had generally lower gross profit margin, lower fresh fruit bunches yield and lower crude palm oil yield.
Other reasons cited for the "reasonable" stance were the same as when the previous offer was made - IndoAgri's underperformance against the rebased FTSE Strait Times All Share Index in the past one year, the offer price exceeding target prices of analysts, no other take-over offer and Indofood Sukses Makmur already having statutory control over IndoAgri.