SPI plans stall as tender offer claimed below value

SET-listed Saha Pathana Inter-Holding’s (SPI) plan to acquire three food companies under the Saha Group may hit a snag after the company’s independent financial adviser recommends that shareholders reject the tender offer, saying the price offering of 53.15 baht per share is undervalued.

According to a report by Grant Thornton Services Ltd, the fair price range appraised based on the sum-of-parts approach should be in the range of 58.77-73.14 baht apiece.

The fair price is higher than the tender offer price by 5.62-19.99 baht or 10.57-37.61%.

“The shareholders may consider the opportunity to sell President Rice Products Plc’s [PR] shares through the SET at prices higher than tender offer prices,” said the report.

Yesterday, PR shares dropped 25 satang to 60.25 baht, in trade worth only 781,560 baht.

Over June 1-20, 14 business days before the first day of the offer period, the highest and lowest prices of PR shares in the SET ran between 60 and 61.25 baht per share.

Therefore, shareholders have the option to sell their shares to fetch higher prices than the tender offer during the offer period or in the future.

However, PR shares have relatively low liquidity. During the offering period, the average daily trading volume was only 11,357 shares or 0.008% of the total shares.

SPI has filed a co-tender offer with Thai President Food (TF) for PR shares with the intention of supporting the amalgamation of the companies to form the new food flagship company Saha Group.

SPI expects that the amalgamation will result in long-term benefits to the company and shareholders.

The tender offer period is June 26 to July 26 this year, and this tender offer price is the final offer price.

Poranee Thongyen, head of research at Asia Plus Securities, said that as PR’s net profit growth is about 10% a year, the suitable share price should start at 60 baht.

“The tender and the amalgamation of the two companies [TF and PR] will be good for all participants. At least, the market capitalisation of the new company will be larger. However, the offer price at 53 baht is too low,” she said.

She expects the deal to move forward. SPI has 32.76% in PR. It needs an additional stake of around 15% to have majority control and carry out the amalgamation.

“I guess no retail investors are willing to sell at this price as PR shares pay attractive dividends every year, while PR’s share prices do not swing much and have relatively low liquidity,” Ms Poranee said.

SPI shares closed yesterday on the Stock Exchange of Thailand at 41.75 baht, an increase of 1.75 baht, in trade worth 26.78 million baht.