French drink and food company Groupe Danone has shown disappointment that the independent directors of takeover target Frucor Beverages have rejected its bid, an Industry Search report comments this week.
Danone Asia's managing director Simon Israel said he was not surprised at the independent valuation range of $2.53-$2.96 per share, but was taken aback by the bottom range, which is notably higher than Danone's offer of $2.35.Frucor closed up 5c Friday at $2.50.
"..our offer... is already a 41 per cent premium on Frucor's average price over the past six months," he said.
"Another observation is that since the stock was floated, the analysts' valuations have been on average 66 per cent higher than what the market's been prepared to pay, and I guess I've got to be a bit cautious about thinking I'm cleverer than the market, so clearly the market tends to discount Frucor's expected performance."
Israel said there was no evidence of another bidder, but hesitated to say market players were trying to increase the price.
"My personal view is at the time this company was floated they tried to get a strategic partner from a major beverage company, and none was forthcoming...
There's been plenty of time for people to appear on the scene since our intentions were made known...
You can only judge by the evidence."
However, Frucor's independent directors begged to differ.
They said they had received consistent feedback from shareholders and analysts that Frucor shares were worth more.
"The independent directors believe that Danone and other potential purchasers may have significant opportunities for synergistic benefits from an acquisition of Frucor and that these benefits have not adequately been taken into account in the Danone offer," they said in their letter to shareholders.
Danone maintains it wants 90 per cent of the company, thereby giving it the capacity to acquire the rest of the shares.
Danone already has at least 38 per cent after Frucor's main shareholder, Bain Capital and Pacific Equity Partners, accepted the offer.
The offer will remain open until December 7.Israel did not say whether Danone would consider upping its bid, but did say he would consider letting the current bid lapse if it did not get its 90 per cent , and expressed concern about Frucor's true value.
He said it was continuing to lose money in Britain, where it is trying to integrate its flagship product, the energy drink V.