KEY POINTS:
Tourism Holdings is worth more than the takeover offer from prospective buyer Australian tourism company MFS Living and Leisure, says brokerage Forsyth Barr.
The intended full takeover by MFS Living offers shareholders $2.80 cash a share for Tourism Holdings, which closed down 2c yesterday at $2.72 as against $2.27 before news of the offer.
However, Forsyth Barr yesterday raised its fair valuation of the tourism operator from $2.58 to $3.17 a share.
Tourism Holdings owns coaches, rents vehicles and operates attractions such as Kelly Tarlton's Underwater World and the Waitomo glow worm caves. Its brands include Maui and Kiwi Experience.
Head of research Rob Mercer said the previous valuation was conservative and did not factor in some revenue opportunities, while Tourism Holdings was a better company than reflected by the market.
Investors had sat through four years of disappointing results and earnings volatility, Mercer said.
"First the Australian rentals business started to underperform then just as that was recovering the leisure group last year started to underperform," he said. "But as it sits today all its assets are fully invested and so they're in good shape."
MFS Living's offer was credible but did not reflect growth prospects and shareholders should wait for the independent adviser's report, Mercer said.
Forsyth Barr reiterated its buy advisory for Tourism Holdings.
But Shareholders Association chairman Bruce Sheppard said the $2.80 looked fair. The potential loss of another company from the New Zealand stock exchange was sad but inevitable, he said.
MFS Living chief executive Marshall Vann said the company intends to retain all 867 domestic and 189 international Tourism Holdings employees, including chief executive Trevor Hall.
