AmResearch advises Cocoaland shareholders to accept takeover offer

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KUALA LUMPUR (June 3): AmResearch Sdn Bhd reaffirmed its “Buy” rating on Cocoaland Holdings Bhd with an unchanged fair value of RM2.35 after Cocoaland announced that it had received an offer from Hong Kong-based First Pacific Company Limited to acquire its business including all assets and liabilities at RM463.3 million or RM2.70 per share.

In a note today, AmResearch said that at a 15% premium of its fair value of RM2.35 and a 32% premium to its last traded price of RM2.04, the offer price was recommendable to investors.

“At the offer price of RM2.70, this values the company at FY15F PE of 18x based on our forecast,” AmResearch said today.

“As such, we recommend investor to accept the offer as the proposed offer price is fair,” it said.

Cocoaland announced that it had received an offer from HK-based First Pacific Company Limited to acquire its business including all assets and liabilities at RM463.3 million or RM2.70 per share.

The company would be an empty shell after the sale of the business with proceeds going back to shareholders in dividends or as capital repayment.

AmResearch said Cocoaland had not traded at or above the offer price for the past 10 years, the highest being RM2.68 in July 2010.

The research house said this was also higher than the first offer made by Navis Asia VII Management Company Ltd of RM2.20 per share on May 22.

First Pacific requires 75% approval from shareholders for its buyout offer for Cocoaland’s business, significantly Leverage Success Sdn Bhd with a 38% stake and Fraser and Neave Holdings (F&N) with a 27% stake.

Leverage Success intends on acquiring a stake in the special purpose vehicle (SPV) to be used by First Pacific for the proposed acquisition.

Cocoaland will enter into an exclusive period with First Pacific for six weeks in relation to the proposed acquisition, which is still subject to due diligence exercise.

At the noon break today, Cocoaland jumped 19.61% or 40 sen to RM2.44 with 2.19 million shares traded.