API Group PLC a global supplier of foils, films and laminates. I have a holding in my growth portfolio (epic code: API).
With API's share price falling to 10x this year's expected earnings at 47p, following disappointing interims, it is no great surprise that the company has received an approach.
Cedar 2015 Limited, an indirect subsidiary of Steel Partners Holdings L.P. (who already hold 32.3% of API), announces its intention to make an offer to acquire API at 60p per share. The offer values the equity at approximately £46m.
Interesting approach, since back in February 2012 there was pressure from Steel and Wynnefield (who hold 29.7%) for the directors to initiate a sale process by inviting tenders. A year later, it was announced that indicative bids were below 90p per share and all three activist shareholders (including Chrystal Amber who own 11%) took the view that an offer at that level would not reflect the value of the company.
The directors of API have said that there have been no discussions to date relating to the Offer between Cedar and the API Board, which probably implies that Cedar have lost faith in the management, or disagree with the strategic direction of the business and the normal channels of communication have broken down . The API Board have said they will "...carefully consider its position and a further announcement will be made in due course...". This may be management speak for taking the time to seek a "white knight" who may be prepared to pay a bigger premium. At 9.2x expected 2016 earnings 60p is not a "killer" offer.
Cedar has indicated that it has letters of intent or irrevocable undertakings for 62% of the issued share capital. Cedar's own shares (32.3%) and the irrevocable undertaking from Wynnefield (15.2%) are 46.5%, as Wynnefield have only signed a letter of intent for their balance of 14.5%, which leaves one with the impression that they are both trying to flush out a higher offer.
Cedar 2015 Limited, an indirect subsidiary of Steel Partners Holdings L.P. (who already hold 32.3% of API), announces its intention to make an offer to acquire API at 60p per share. The offer values the equity at approximately £46m.
Interesting approach, since back in February 2012 there was pressure from Steel and Wynnefield (who hold 29.7%) for the directors to initiate a sale process by inviting tenders. A year later, it was announced that indicative bids were below 90p per share and all three activist shareholders (including Chrystal Amber who own 11%) took the view that an offer at that level would not reflect the value of the company.
The directors of API have said that there have been no discussions to date relating to the Offer between Cedar and the API Board, which probably implies that Cedar have lost faith in the management, or disagree with the strategic direction of the business and the normal channels of communication have broken down . The API Board have said they will "...carefully consider its position and a further announcement will be made in due course...". This may be management speak for taking the time to seek a "white knight" who may be prepared to pay a bigger premium. At 9.2x expected 2016 earnings 60p is not a "killer" offer.
Cedar has indicated that it has letters of intent or irrevocable undertakings for 62% of the issued share capital. Cedar's own shares (32.3%) and the irrevocable undertaking from Wynnefield (15.2%) are 46.5%, as Wynnefield have only signed a letter of intent for their balance of 14.5%, which leaves one with the impression that they are both trying to flush out a higher offer.
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