Cerebos questions Comvita valuation

Cerebos Pacific says it may "just walk away" from its takeover bid for natural health products company, Comvita New Zealand.

Singapore-listed Cerebos had originally offered $2.50 a share for the Paengaroa-based company specialising in health and skincare products derived from manuka honey.

Comvita has steadfastly opposed the bid, and its directors said a valuation by independent adviser Grant Samuel put the value of its shares at between $3.40 and $4.

George Crocker, chief executive of Cerebos' food and coffee division, said the independent report was "not credible at all" and if it raises its offer, it will not be within that range.

Comvita has forecast a normalised profit of $7.3-$8.2 million and sales of between $91 million and $95 million for the year ending March 31.

Mr Crocker said Comvita was "not a company that we are prepared to buy at any cost".

He said Cerebos would make a decision this week.

Comvita has suggested that others could be interested in the company, but Mr Crocker said: "If another party is interested, I don't know what they are waiting for."

Cerebos has until December 7 to extend its offer or let it lapse.

"Our analysis tells us that the range of $3.40 to $4.00 a share provided by the independent adviser Grant Samuel and Associates is not credible," Mr Crocker said.

"We also believe that the market is telling us the same thing with the current share price below $3," he said.

"In our view it is not realistic to expect that anyone is going to offer $3.40 a share for Comvita, based only on the current year's earnings forecast, which is that it may not achieve and which may not be sustainable in the future," he said.

Mr Crocker said Cerebos may abandon the bid, or look at acquiring another player, or going it alone under its own "BRANDS" banner.

Comvita's shares are trading at $2.95.APNZ