An independant advisers' share valuation has backed a proposed takeover of Dunedin specialist engineering company Scott Technology by JBS Australia.
Details of the proposal released yesterday reveal that if JBS obtains at least a 50.1% and, potentially, goes on to gain a 100% shareholding in Scott (SCT), the engineering company would be delisted from the stock exchange by JBS.
The Australian division of Brazilian food giant JBS is looking to take a controlling 50.1% of Scott. JBS offered $1.39 per share in late August, while yesterday independent adviser's Northington Partners' announced its valuation of Scott ranged between $1.08 and $1.26.
While the Northington valuation suggests the JBS offer represents a premium for shareholders, Northington acknowledged the price was below market value, as the shares had traded consistently higher during recent years.
SCT shares were at $1.33 when JBS initially made its bid, and yesterday were down slightly, trading around $1.50.
Shareholders will vote on the proposal, which has the backing of Scott's board, on November 26. The proposal requires 75% of shareholders to accept the arrangement.
For JBS to attain a 50.1% stake, a complicated placement of 10 million new shares to JBS, an offer to buy shares from existing shareholders, a 1:8 non-renounceable rights issue, and if required, a further placement of shares, has been proposed.
Scott is running roadshows in Auckland and Wellington on November 16, and Christchurch and Dunedin the following day, which will include JBS management.
Yesterday, Scott released the Northington report, proxy, voting and acceptances notices on the stock exchange, and a 23-page ''Scheme Booklet'', outlining how the arrangement would be implemented.
The booklet said the arrangement was considered the most convenient way to secure additional capital from JBS, for JBS to obtain a (conditional) controlling stake, and for existing shareholders to either sell, or acquire new shares.
The minimum capital received under the scheme would be $13.9million and the maximum capital could be $78.8million.
If the minimum additional capital is received, debt would be reduced to $3.5million, while if the maximum capital was received all debt would be repaid, with a cash surplus of $61.4 million remaining.
The Northington report said Scott ''will arguably have better opportunities'' to grow its business in the meat processing sector through JBS' global operations and gain the ability to fund growth.
