By Phil Boeyen, ShareChat Business News Editor
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Tuesday 8th January 2002 |
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An appraisal report into Frucor released last year valued the company's shares at between $2.53 and $2.96, but the updated report released Tuesday has dropped the valuation to between $2.38 and $2.80 per share.
The independent directors say that while the current year end forecasts for the company are unchanged and the New Zealand business is performing above expectation, growth of the Australian energy drink market is now expected to be a little slower than anticipated and costs will be higher.
Shareholders are being advised that although Danone's offer is still unfair, the bottom end of the updated valuation is only $0.03 above the offer and "in all the circumstances it is now considered reasonable".
"Accordingly, in the absence of a higher competing bid, the committee now recommends that shareholders accept the Danone offer, and will be accepting for their personal shareholdings," says committee chairman, Ian Donald.
In a letter to shareholders Mr Donald says that if the Danone offer lapses and a new bid is not made by either Danone or a new bidder at the current or higher price, Frucor's share price will weaken from its current levels.
"The committee also notes that since the Danone offer was announced, an increased portion of the shares are now held by risk arbitrage funds and consider that they too are unlikely to be long term holders.
"The desire for these holders to sell their shares in the near future is likely to have a negative influence on the share price. However, a further bid for Frucor at some future date cannot be ruled out."
If Danone fails to gain 90% of acceptances by the end of next week the company can let the bid lapse, or if it has more than 50% acceptances it can take a majority stake.
Another option is to settle with Bain & Associated Capital for a 19.9% holding, leaving Bain with 17.7%.
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