SIME (4197) - Sime Darby Bhd - Sime receives EU clearance to buy NBPOL
Target RM9.58 (Stock Rating: HOLD)
The European Commission has approved Sime’s proposed acquisition of NBPOL, paving the way for the deal to be completed by 1H15. The news is broadly in line with our expectations. The offer condition of minimum 51% acceptance has been met, as Sime has achieved 58.7% acceptance rate as at 3 Dec 2014. We expect this acquisition to be slightly earnings accretive for the group. We maintain our earnings forecasts and SOP-based target price, pending completion of the deal. The stock remains a Hold.
What Happened
The European Commission has approved the acquisition of New Britain Palm Oil (NBPO LN) by Sime Darby, under the EU Merger Regulation. The commission concluded that the proposed acquisition would not raise competition concerns, particularly given the parties’ geographic complementarity within the EU and the presence of other palm oil product suppliers. The operation was examined under the normal merger review procedure. Pursuant to the EU Commission’s clearance, the condition on the EU merger filing has been fulfilled. Sime Darby’s offer to acquire all the shares in NBPOL at £7.15 per share will remain open until 20 Mar 2015.
What We Think
The news is broadly in line with our expectations. This represents the last hurdle to the deal’s completion. NBPOL’s last closing price of £7.08 per share reflects market confidence that the proposed cash offer will go through. To recap, the offer values the entire NBPOL at approximately £1.073bn (RM5.9bn) and the planted oil palm estates at US$25.9k per ha (RM93.2k). We are neutral on this deal as we expect this acquisition to be mildly earnings accretive for the group. The offer condition of a minimum 51% of the voting rights for NBPOL shares has been met. As at 3 Dec 2014, total acceptances representing 58.7% of NBPOL’s voting shares have been received. We project the acceptance rate for NBPOL to rise, following this news and expect Sime to end up with around 85% if all the shareholders, except the PNG government-related funds, accept the offer. This would allow Sime to gain control of the board and potentially delist the stock from the exchanges.
What You Should Do
We do not expect this news to move Sime’s share price, as it is broadly in line with market expectations. Maintain Hold.
Source: CIMB Daybreak - 29 January 2015
Target RM9.58 (Stock Rating: HOLD)
The European Commission has approved Sime’s proposed acquisition of NBPOL, paving the way for the deal to be completed by 1H15. The news is broadly in line with our expectations. The offer condition of minimum 51% acceptance has been met, as Sime has achieved 58.7% acceptance rate as at 3 Dec 2014. We expect this acquisition to be slightly earnings accretive for the group. We maintain our earnings forecasts and SOP-based target price, pending completion of the deal. The stock remains a Hold.
What Happened
The European Commission has approved the acquisition of New Britain Palm Oil (NBPO LN) by Sime Darby, under the EU Merger Regulation. The commission concluded that the proposed acquisition would not raise competition concerns, particularly given the parties’ geographic complementarity within the EU and the presence of other palm oil product suppliers. The operation was examined under the normal merger review procedure. Pursuant to the EU Commission’s clearance, the condition on the EU merger filing has been fulfilled. Sime Darby’s offer to acquire all the shares in NBPOL at £7.15 per share will remain open until 20 Mar 2015.
What We Think
The news is broadly in line with our expectations. This represents the last hurdle to the deal’s completion. NBPOL’s last closing price of £7.08 per share reflects market confidence that the proposed cash offer will go through. To recap, the offer values the entire NBPOL at approximately £1.073bn (RM5.9bn) and the planted oil palm estates at US$25.9k per ha (RM93.2k). We are neutral on this deal as we expect this acquisition to be mildly earnings accretive for the group. The offer condition of a minimum 51% of the voting rights for NBPOL shares has been met. As at 3 Dec 2014, total acceptances representing 58.7% of NBPOL’s voting shares have been received. We project the acceptance rate for NBPOL to rise, following this news and expect Sime to end up with around 85% if all the shareholders, except the PNG government-related funds, accept the offer. This would allow Sime to gain control of the board and potentially delist the stock from the exchanges.
What You Should Do
We do not expect this news to move Sime’s share price, as it is broadly in line with market expectations. Maintain Hold.
Source: CIMB Daybreak - 29 January 2015
