Braas Monier activist Petrus canvassed “nearly all” of top 20 shareholders on Standard Industries offer
Petrus Advisers spoke to nearly all of Braas Monier’s (ETR:BMS) top 20 investors prior to publishing a letter aimed at further quashing Standard Industries’ hostile takeover offer, Petrus partner Till Hufnagel told this news service.
Braas Monier’s management has repeatedly told shareholders to reject the EUR 25 per share offer Standard Industries made on 14 September, detailing four main reasons why the offer undervalues the company and its prospects. Its formal response is still pending.
Standard Industries has pressed ahead with the bid based on the circa-40% stake already committed to the tender via its fully-owned affiliate 40 North (29.11%) and another shareholder Monier Holdings with its 10.8% stake. It intends to combine the target with its own company Icopal.
A person familiar with the target said more than half of the 60% of shares not already tendered by Monier Holdings and 40 North are believed to be supportive of the company’s stance against the offer. If an AGM was held tomorrow, the offer would not succeed, the person suggested.
London-based activist hedge fund Petrus, which supports Braas Monier’s view, has uncovered similar sentiment among the shareholders it surveyed, Hufnagel said.
Petrus did not speak to 4.89% investor Wellington Management Group nor 40 North prior to sending the letters. But sounded out “nearly all of the top 15 to 20 shareholders with very few exceptions,” Hufnagel said. “There’s been very clear feedback that people are very unhappy with what’s been happening here.”
Petrus’ letter recommends a valuation for Braas Monier of between EUR 28.50 and EUR 31 per share. The letter was addressed to 40 North, which is an affiliate of Standard Industries.
Standard Industries and Braas Monier both declined to comment on the letter.
Aside from voicing its opposition to the low offer, Petrus wrote a second letter to Braas Monier’s management urging it to be proactive in the face of the “aggressive” approach from Standard Industries, Hufnagel said.
He believes the company is being unduly restricted from taking up M&A opportunities while fending off the bid. Hufnagel notes that the offer conditions prevent the company from entering into material transactions valued at more than EUR 50m.
“We don’t want them to sit still and wait for the outcome of the offer and lose precious time in which they normally would have created value by driving the operations,” Hufnagel said.
“We are not the management team so we won’t tell them what M&A to do… even if there are a lot of acquisitions, and we do believe there are one or two smaller ones that would be a great fit, it has to come at the right terms and they’ll have to figure that out.”
The share price reaction to the offer shows the market does not believe the deal will happen at that level, Hufnagel said. Braas Monier's stock has been trading above the offer price since the deal was announced, and closed Wednesday at EUR 26.75.
“The chances of these guys getting to their goal, which is quite clearly to dominate the company and combine with Icopal, we think it’s going to be very difficult for them.”
Standard Industries is unlikely to alter the price or terms of the offer, although it would likely comment once the company releases its official response to the offer document, a person familiar with the bidder said.
Petrus’ aggression via the letters was unwarranted, but not unexpected given its activist reputation, the person familiar with the bidder said.
Wellington recently disclosed it had sold its stake down to 4.89% from 9.89% on 11 October.