ESW Holdings' $41.4 million takeover offer for SLI Systems "is compelling," according to independent valuer Northington Partners.

SLI's committee of independent directors is also unanimously recommending that shareholders accept ESW's offer.

"ESW's offer provides an attractive opportunity for shareholders and option-holders to realise value in their securities while eliminating the risks SLI faces pursuing its new product strategy," says Greg Cross, the chair of the independent committee.

Northington values the shares between 37 cents and 53 cents, significantly below ESW's 65 cent offer.

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Northington says the offer price is also about 117 per cent higher than the 30 cent market price before the offer was announced.

"On this basis, we conclude that the offer is compelling," Northington says, adding that it expects the offer will be "strongly supported."

SLI shares closed yesterday at 61 cents.

Texas-based ESW has already locked up 51 per cent of SLI's share through agreements with 18 of SLI's about 1,500 shareholders.

It wants to get to 90 per cent so that it can compulsorily acquire the remaining shares but Northington notes ESW has the power to waive that condition.

"SLI has explored a range of strategic options over the last two years with the objective of maximising shareholder value," Northington says.

"These have included potential market consolidation opportunities and exploratory engagement with potential acquirers," it says.

"Following evaluation of the alternatives available (including indicative expressions of interest in SLI following this process), the SLI board considers that the ESW offer is the most favourable."

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Given the board's extensive market engagement and considering that SLI has just commenced implementing its new business strategy, "we suggest that there may not be another opportunity for shareholders to exit their investment in the short to medium term at the offer price," Northington says.

It also notes that the shareholders who have already accepted ESW's offer include the current SLI directors and executives as well as the remaining institutional investors.

"Each of these parties has clearly determined that accepting the offer is the best alternative available," Northington says.

Nevertheless, the outcome will be disappointing to those investors who participated in SLI's initial public offer in May 2013 – they bought their shares at $1.50 each.

The offer is open until at least December 10 but Cross says he encourages shareholders to accept the offer promptly.

- BusinessDesk