“Independent Opinion” recommends to accept
Providing an “Independent Opinion”, Capital Alliance Partners has recommended that remaining owners of voting shares in J.L. Morison Sons & Jones PLC (MORI) accept the mandatory offer announced by Hemas Holdings.
The mandatory offer of Rs. 366.5 per ordinary voting share was triggered following the purchase of a 71.5 percent stake by Hemas Holdings (HML) for a consideration over Rs. 1.7 billion end of May. The offer is scheduled to close today.
Capital Alliance based the assessment on a Rs.203-266 going concern valuation of ordinary voting shares in MORI.
Additionally, a Capital Alliance report also highlighted the likely delisting of MORI along with the highly illiquid nature of its shares as further incentives for investors to accept the offer.
“MORI shares features considerable illiquidity due to its lack of free float and lack of catalysts to attract investor attention.”
“Further, HML has specified that the acquisition of MORI is of strategic importance and therefore the natural expectation would be that the acquirer HML would seek to buy up the remaining MORI shares and delist the firm. Whilst not explicitly stated by the Offeror, should it gain a shareholding of 90 percent either via this Mandatory Offer or within the next few years, a delisting would be likely,” the report noted.
It further noted that the possible acceptance of the offer by more shareholders would reduce the free float even further leading to even greater illiquidity of shares.
“This could result in lower (or negative) share prices even if the company performs well in the future, as the premium offered by HML may not persist,”
“CAL views the Mandatory Offer as an excellent liquidity event and recommends investors use the takeover as an opportunity to exit their investment in MORI by accepting the Offer,” the report stated.
HML currently operates FMCG brands including Baby Cheramy, Kumarika, Clogard, Diva, Fems and Velvet.
MORI’s portfolio includes brands like Lacto Calamine, Valmelix, Morrisons Gripe Mixture and Morrison’s Baby products in addition to the distribution of Good Knight, Kiwi , Wi p ro, N ive a , Garnier and L’Orea.