Pressure is coming to bear on Cerebos to lift its hostile $71.6 million takeover bid for honey-based manufacturer Comvita, whose offer has been appraised as almost 40% under value by independent advisers Grant Samuel.
Comvita confirmed yesterday three other parties had "made inquiries", with the potential for separate offers but with nothing on the table.
Comvita's management yesterday reiterated their earlier stance, again advising shareholders not to sell.
"The [Cerebos] offer places little value on our development of the business in the last few years," Comvita chairman Neil Craig said.
He confirmed in a telephone conference yesterday that three other parties had made inquiries, but he had "no idea" if any would proceed with a counteroffer.
"[However], this is the point we would expect anyone [else] to come out of the woodwork," Mr Craig said.
Since the offer, Comvita shares had risen almost 40%, from $2.10 on November 13 to $2.90 in recent days. There was no further price movement yesterday.
Following Cerebos' $2.50 share offer in mid-October to try to gain a 90% stake and 100% takeover of Comvita, the Grant Samuel report yesterday estimated Comvita's value to be $3.40 to $4 a share - or $100.5 million to $118 million.
The Grant Samuel valuation of Comvita had a premium range of between 26% and 38% on the $2.50 Cerebos offer.
"As the Cerebos offer of $2.50 per share is below Grant Samuel's assessed value range for Comvita shares, there is no compelling reason to accept the offer," the report said.
Chief executive of Cerebos Gregg's George Crocker said the Grant Samuel view on value was "certainly much higher than we would have expected".
He noted that before Cerebos' approach to Comvita on August 26, the Comvita share price was $1.75 per share.
"Now Cerebos and the Comvita shareholders are being encouraged to believe that the company's shares are worth between $3.40 and $4.00 based on a multiple of forecast earnings. Given the lack of explicit forecasts and Comvita's track record, that takes a great leap of faith," Mr Crocker said in a statement in response to the report yesterday.
"It is our belief that if our takeover is unsuccessful, the Comvita share price is likely to fall back nearer to the levels it was at prior to our takeover announcement," Mr Crocker said.
While the Cerebos offer is conditional on it receiving 90% acceptance from shareholders in Comvita and approval of the Overseas Investment Office, it could change the level of acceptance to anything above 50% in the near future.
Grant Samuel noted 64% of Comvita's share was owned by the top 20 shareholders or custodians and their respective support would be "material" for whether Cerebos achieved 90%, or the lower 50% threshold.
Grant Samuel said that with Comvita shares trading above the Cerebos offer, it was unlikely any shareholder would accept, given they could sell on-market for a higher price.
One factor noted was the market "believing" there was a possibility of a higher offer.
Last week, Comvita posted a turnaround half-year result to post a $2.2 million profit, compared to a $2.2 million loss for the same period last year.
Comvita reaffirmed earlier guidance it was on track to meet the forecast for the full year ending March 2012 of sales in the range of $91 million to $95 million, compared with $82 million last year.
Normalised after-tax profit is expected of between $7.3 million to $8.2 million, compared with $3.6 million last year.
But Mr Crocker said in order to meet its full-year target, Comvita would need to have a second-half profit that was twice the level of the first-half profit.
Management have said the second-half results for Comvita have historically been significantly stronger than those for the first half and they expected this to be the case again this financial year.
However, Mr Crocker said the question was whether Comvita could achieve this and whether the company was able to break out of its historical volatile earnings trend under its current ownership and governance.
