Sweet talk missing for firms

Cerebos New Zealand is keen to secure a foothold in the Manuka honey products market and may end up a rival to local manufacturer Comvita if its $71.6 million takeover bid falls through.

Chief executive of sister company Cerebos Gregg's, George Crocker, said "there's quite a number of alternatives" involving local beekeepers and Manuka honey product suppliers who the company can work with or acquire.

The shift in attitude comes after a Grant Samuel independent adviser's report panned the Cerebos offer, saying it undervalued Comvita by as much as 38 per cent.

Crocker said he rejects the $3.40 and $4 a share value range put forward by the independent adviser, which was based on Comvita's 2012 forecast earnings and extrapolated into future earnings.

"That became the basis for the valuation and we just don't see it as credible at all," Crocker said. "We're not going to buy at any cost."

Comvita shares fell 2.1 per cent to $2.87 in tradingyesterday. That's still a 15 per cent premium to the Cerebos offer. The stock has surged 94 per cent this year.

The valuation also ignores risks facing Comvita, such as disunity among beekeepers over honey standards, a growing resistance to treatments by some pests including the varroa mite, and the weak global economy, which has sapped demand for luxury items, Crocker said.

Comvita chairman Neil Craig said his board saw more value in the Manuka honey products maker than the independent adviser's report and that an offer would have to reach the directors' expectations before they could seriously assess it.

"We're not for sale and have never been up for sale," Craig said.

Cerebos' $2.50 per share offer last month was met with strong opposition by Comvita's Craig, who called it an "unsolicited, unwelcome, opportunistic" bid.

Comvita's board has recommended shareholders decline the offer. The heated response to their offer wasn't enough to make Cerebos withdraw, but certainly strained the relationship.

"We never wanted to get into hostile action - they were quite welcoming and we were on very good terms until we delivered our idea of value," Crocker said.

A Deutsche Bank analyst who follows the stock has a price target of $2.91 a share, which Crocker says is more realistic and closer to the current market price than the range put forward in the report.

Cerebos has until December 7 to extend its bid, but has yet to make a firm decision whether it will do so. If the company decides against extending the offer, the original bid will close on December 22.

"Our position is that we're not going to raise the offer to within the independent appraiser's range," Crocker said. "We're considering whether to raise the offer at all or if we walk away."

Cerebos NZ is the local bidding vehicle for Singapore-listed Cerebos Pacific, and will delist Comvita if it wins 90 per cent of acceptances, the minimum level needed to force compulsory acquisition.

Sister company Cerebos Gregg's, whose local brands include Caffe L'Affare coffee, Bisto gravies, and Raro drink powder, recently invested $13 million to expand facilities in a joint venture at Mount Maunganui.BusinessDesk