Offer for Comvita 'undervalues firm'

An independent adviser has found Cerebos's offer to Comvita shareholders undervalues the company by up to $1.50 a share, leading directors to confirm their "do not sell" advice.

Shareholders for the Paengaroa company have been offered $2.50 a share by Cerebos New Zealand, a 100 per cent subsidiary of Singapore's Cerebos Pacific, in a bid to gain the 90 per cent of shares required for Cerebos to force compulsory acquisition of the remaining shares.

But independent adviser Grant Samuel's report on the takeover bid estimates the share value at $3.40 to $4 - 36-60 per cent higher than the Cerebos offer, and Comvita directors believe the higher value still does not reflect the company's potential.

"This is not the time to sell your Comvita shares. None of the directors are accepting the offer. If a buyer emerges willing to fully recognise the potential of Comvita, we will assess such an offer and report to shareholders."

Chairman Neil Craig and his fellow directors have issued their target company statement, reinforcing previous advice to shareholders not to accept the offer, saying the offer is too low and Cerebos is unable to offer "anything of significance" above the existing strategic initiatives being developed by Comvita.

"In the last five years substantial progress has been made in the development of Comvita and the business is performing strongly. Management and staff across the company are focused and determined to deliver on many years of careful planning and investment in growth initiatives."

Samuel's report says there is "no compelling reason" to accept the offer, given the share price is below the estimated value range. He said Cerebos had indicated it would continue to operate as a largely stand-alone business should the takeover be successful.

"Acceptance or rejection of the Cerebos offer is a matter for individual shareholders based on their own views as to value and future market conditions, risk profile, liquidity preference, portfolio strategy, tax position and other factors. In particular, taxation consequences will vary widely across shareholders. Shareholders will need to consider these consequences and, if appropriate, consult their own professional adviser."

The Cerebos offer closes on December 22.