Cerebos New Zealand is stepping up pressure on Comvita to accept its takeover offer, saying it would consider setting up a rival manuka honey products business if the $71.6 million takeover bid falls through.

George Crocker, chief executive of sister company Cerebos Gregg's, told BusinessDesk "there's quite a number of alternatives" with local beekeepers and Manuka honey product suppliers that the company can work with or acquire. The shift in attitude comes after a Grant Samuel independent adviser's report panned the Cerebos offer, saying it undervalued Comvita by as much as 38 per cent.

Crocker said he rejects the $3.40 and $4 a share value range put forward by the independent adviser, which was based on Comvita's 2012 forecast earnings and extrapolated into future earnings.

"That became the basis for the valuation and we just don't see it as credible at all," Crocker said. "We're not going to buy at any cost."


The valuation also ignores risks facing Comvita, such disunity among beekeepers over honey standards, a growing resistance to treatments by some pests including the varroa mite, and the weak global economy which has sapped demand for luxury items, Crocker said.

Cerebos' $2.50 per share offer last month was met with strong opposition by Comvita chairman Neil Craig, who called it an "unsolicited, unwelcome, opportunistic" bid. Comvita's board has recommended shareholders decline the offer.

The heated response to their offer wasn't enough to make Cerebos withdraw, but certainly strained the relationship.

"We never wanted to get into hostile action - they were quite welcoming and we were on very good terms until we delivered our idea of value," Crocker said.

The shares fell 1.7 per cent to $2.90 in trading today, and a Deutsche Bank analyst who follows the stock has a price target of $2.91 a share, which Crocker says is more realistic than the range put forward in the report.

Cerebos has until December 7 to extend its bid, but has yet to make a firm decision either way.

"Our position is that we're not going to raise the offer to within the independent appraiser's range," Crocker said. "We're considering whether to raise the offer at all or if we walk away."

Cerebos NZ is the local bidding vehicle for Singapore-listed Cerebos Pacific, and will delist Comvita if it wins 90 per cent of acceptances, the minimum level needed to force compulsory acquisition.


Sister company Cerebos Gregg's, whose local brands include Caffe L'Affare coffee, Bisto gravies, and Raro drink powder, recently invested $13 million to expand facilities in a joint venture at Mount Maunganui, and is spending $6 million on the country's only instant coffee producing plant in Dunedin.