Abano Healthcare is worth $8.30 to $10.05 a share for 100 percent of the company, a premium of as much as 46 percent to recent trading and well north of the takeover price proposed by Archer Capital and shareholders Peter Hutson and James Reeves, Grant Samuel says.
The healthcare investor released the adviser's report at its annual meeting, saying the Archer consortium's indicative price range of $6.97 to $7.14 a share "significantly undervalues" Abano and its portfolio of businesses and it said there are rival opportunities that it is currently assessing.
Its largest business, dental, alone may be worth more than is being proposed for the whole group, Abano said in a presentation for the annual meeting.
The stock climbed 5 percent to $7.14 today, giving the company a market value of $146 million.
Grant Samuel values Abano's dental business in a range of $229.5 million to $256.5 million, its diagnostics business at $39.3 million to $45.3 million and its rehabilitation interests at $9.6 million to $12 million, putting the company's enterprise value at between $258 million and $291 million.
The Grant Samuel report isn't a formal assessment in terms of the Takeovers Code because no takeover offer has been made. The Archer group hasn't responded to a counter-proposal from Abano to set a price to buy or sell the 50 percent of the Bay International audiology business not owned by Hutson.
Chairman Trevor Janes told shareholders that the Archer group's proposed scheme of arrangement, under which Hutson would get the remaining 50 percent of Bay International at a nominal sum, had been "a major distraction" that has added to the workload of board and management and added costs.
The Grant Samuel report "supports the board's judgment in dismissing the Archer/Hutson/ Reeves approach as opportunistic and undervaluing the group," Janes said.
The proposal, though, has "accelerated and brought forward a number of other options that we are assessing," he said. "While we cannot disclose any further information at this stage, as we are currently evaluating proposals, we can say that some options have indicative valuation ranges that are significantly higher in value than the Archer/Hutson/Reeves proposal and assessment to date indicates material potential benefit to all our shareholders, not just a select few."
The board's position was yesterday supported by the NZ Shareholders Association, which called on the Archer group to make a formal offer under the Takeovers Code and concurred with directors that the group shouldn't be allowed to conduct due diligence until then.
Abano forecast first-half sales of $104.9 million to $106.9 million, down from $107.9 million a year earlier. Earnings before interest, tax, depreciation and amortisation would be $12.9 million to $13.9 million, from $14.8 million in the first half of the 2013 year.
It said current soft trading was "a short-term anomaly, primarily due to soft economic conditions in Australia."