KEY POINTS:
An offer for dental software company International Ltd (SOE) from United States-based Fortune 500 company Henry Schein is at the bottom of a valuation range determined by an independent adviser.
The offer price was within adviser Grant Samuel's valuation range of $2.70 to $2.91, a committee of independent SOE directors said today.
The independent directors said they unanimously recommended that securityholders accept the Henry Schein offer in the absence of a superior, alternative offer.
Henry Schein has offered $2.70 per SOE share, together with an entitlement to retain a cash dividend of 3 cents per share to be paid by SOE to shareholders, and $2.73 per mandatory convertible note, in a bid worth $77.2 million.
The independent directors said the offer price represented a 27 per cent premium to SOE's closing share price on April 27, the day before an announcement was made to the stock exchange about a potential offer.
It was also a 38.4 per cent premium to the volume weighted average price in the six months before the announcement.
In a letter to shareholders, independent directors committee chairman Kerry Gleeson said recommending securityholders accept the Henry Schein offer was a fine judgment call, especially as the offer was at the bottom of the valuation range.
But the independent advisers believed the offer was in the best interests of securityholders, he said.
In the absence of a significant expansion strategy, SOE would be viewed as a smaller, mature, lower growth stock than its peers and w ould continue to trade at a discount to those companies.
SOE's European growth strategy brought with it many risks, and the value upside may be limited by the pricing of acquisition opportunities, Mr Gleeson said.
The Henry Schein offer was the only one the independent directors were aware of, and they considered it relatively unlikely a higher, competing offer would be made for SOE.
The certainty provided by the Henry Schein offer must be considered against the only realistic alternative, pursuing a growth strategy through new products or new areas.
The independent directors had concluded that the certainty of the offer was more attractive than the risk and return characteristics of pursuing a growth strategy.
Without an offer, the share price was unlikely to be maintained at current levels.
SOE shares last traded at $2.59 on Friday.
- NZPA
