SIME (4197) SIME DARBY BHD
KUALA LUMPUR: AmResearch remains negative on Sime Darby’s takeover offer for New Britain Palm Oil Ltd (NBPOL) at £7.15 a share cash (RM37.70 a share) or for a total of £1.073 bil (RM5.65bil).
It said on Friday it had earlier cut its fair value to RM10.58 with a wider discount to an unchanged sum-of-parts value of RM12.45 a share.
“We deem the high valuation (at 22 times FY15F consensus earnings) and the premium to be paid for NBPOL as having an offsetting effect on the unlocking of value from the potential listing of the auto division.
“Nonetheless, we do acknowledge that the value propositions ahead would depend largely on what synergies and additional benefits Sime Darby could derive from the acquisition,” said the research house. The stock remains a beneficiary of any upward trend in CPO prices.
Sime Darby has despatched its offer document to NBOL shareholders and the offer will remain open for 57 days until 5pm on Dec 18.
NBOL’s independent directors have unanimously recommended that shareholders accept the offer, in the absence of a superior proposal. The completion of the takeover is expected to be by end-2014 and Sime Darby’s enlarged land bank would be one million hectares.
AmResearch said Sime Darby reiterated that the offer is in line with its Strategy Blueprint to expand the land bank of Sime Darby Plantation, while NBPOL, with its brown field assets, is expected to contribute immediately to earnings without the incumbent risk associated with a green field expansion.
Sime Darby had also explained the offer is expected to result in potential synergies between the group and NBPOL by way of expansion into the upstream and downstream sectors, combined R&D facilities and new growth opportunities in PNG.
The offer will be financed via internal funds and borrowings, the exact quantum of which cannot yet be ascertained as the final amount will be dependent on the level of acceptances. Sime Darby has said it would fund 80% of the acquisition via borrowings.
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