NUTRECO: Situation update - contact with company
The firm offer for NUTRECO was released today. SHV (private) offers Eur44.50 (cum dividend) per Nutreco share in cash.
The Executive Board and the Supervisory Board of Nutreco fully support and unanimously recommend the Offer.
We spoke with Nutreco this morning and they said they believe Cargill is still evaluating the situation.
Nutreco also confirmed they have not requested the AFM set a PuSu deadline.
Such PuSu if requested, could bring timing certainty to proceedings. The lack of such PuSu does mean Cargill can comeback at any time with a revised proposal which must be at least 8% higher so as to gain Nutreco change of recommendation.
The minimum acceptance condition remains 95% and Nutreco confirmed that SHV holds at present c15% of Nutreco shares. The offer is also conditional on receiving clearance from competition authorities including HSR, and the EC.
Timetable
10 December 2014 Commencement of the Offer Period 5 February 2015 Nutreco FY results 9 February 2015 EGM,to discuss the Offer 17 February 2015 First Closing Date End February 2015 Settlement
Extensions to the offer and a post closing acceptance period are commonplace
Cargill/Permira:
The document indicates the exit multiple on offer of 11.1x 2013 Ebitda is 26% higher than prior transactions (EWOS and Provimi) which came at 8.8x Ebitda. Furthermore, the offer price Eur44.50 is Eur10 higher than the average undisturbed consensus analyst fair value.
The offer, then is full and looks fair from a financial standpoint. SHV is also proposing not to break up Nutreco and SHV is known as a "hands off" buyer; all of which would have been greeted by the Dutch works council and unions.
Conversely, Cargill and Permira may only be able to justify paying a higher price if they can break the group but the counterbidders are private companies and do not have to justify synergies or IRR to outsiders. Permira does have capital to deploy with a new Eur5.3bn fund -Permira V. They mention that following the completion of new investments, Permira V is expected to have called 27% of committed capital thus leaving sufficient financial capacity (in that fund alone) to join Cargill in the acquisition of Nutreco.
Nutreco's lack of PuSu request, may be an indication that the door is open for a counterbid.