Deminor has been mandated by 40 shareholders (individuals and companies) who represent more than 5% of the capital of Spadel, or more than 54% of the free float.
Within its assignment, Deminor has succeeded to assemble more than 5% of the capital. The minority shareholders are determined to prevent all possible means to be dispossessed of their shares at an unacceptable price. They are committed to oppose any form of expropriation of their shares by the controlling shareholder or any form of request for a delisting of the shares. The minority shareholders remark that Marc du Bois is not only the majority shareholder and bidder, he is also CEO of Spadel and thereby its duty to act in the interest of all parties.
Deminor has sent a letter to the independent directors of Spadel with a detailed explanation of its questions and comments on the prospectus, as well as regarding the missing information in this prospectus.
The minority shareholders ask, regardless of the outcome of the public buyout offer, an extraordinary dividend of 9 euros per share, representing a total of about 36 million. This concerns the amount of the cash of Spadel which is according to the independent directors considered as excess cash. Spadel has a cash position per June 30, 2015 of 82 million, or 20 euros per share. The independent directors declared in the prospectus their agreement to the bidder to use 36 million to finance the acquisition of the outstanding shares. Deminor believes that all shareholders, including the minority shareholders, are entitled to benefit this excess cash. The cash of Spadel may not only be used when the majority shareholder needs it.
Reminder: On November 27th, Deminor has presented, after a profound analysis of the prospectus, its main remarks and questions. Hereby Deminor has not set a price target but presented its own professional and financial analysis with a valuation range for the share Spadel between 113 and 121 euros.
This valuation range takes into account the following key comments and conclusions:
- The 2016-2020 business plan on which is based the preparation of the valuation by BNP Paribas Fortis (acting for the bidding) and ING (acting at the request of the independent directors), was approved on July 2, 2015, the moment that the intention to launch a takeover bid was already known and ING was already mandated by the independent directors.
- The business plan involves very ambitious and risky investments, without any detailing in the prospectus, that while the independent directors recommended the minority shareholders to accept the offer based on the impact of these investments.
- If the business plan has such a significant impact, the question arises why the shareholders were not informed about the approval of the business plan and consequently the possible takeover at the announcement of the half year-results (24 August 2015).
- Following the analysis of the business plan it is unthinkable that such investments will take place without any significant forecast for the revenue growth and higher profitability. ING or neither the independent directors criticize this.
- Within the valuation according to the DCF-method (discounted cash flow), ING has made use of contestable market references (e.g. beta) with the intent to reduce the valuation range of Spadel, this in contrast to the conventional methods or references in previous valuation reports of ING.
- In 2000, the independent directors recommended the minority shareholders of Spadel to not accept the offer. The financial advisor Petercam used a group of comparable enterprises within the food and beverage sector, which have valuable brands (e.g. Danone, Lotus Bakeries, Neuhaus, Ter Beke). Presently, in the context where the majority shareholder is pressing the minority shareholders to sell their shares, Deminor remarks that ING considers it’s acceptable to limit the selection of comparables to enterprises which are active in the bottling for large brands, or moreover producing under private label for large distributors. These companies do not own valuable brands such as Spadel. Deminor states this selection is debatable and lacks creditability in this context.
- The valuation does not take into account the valuable and market leading brands which Spadel disposes, neither the long-term concessions to its main sources or the safety perimeter of several hectares of land around the different sources.
- Spadel has per June 30, 2015, a cash position of more than 82 million. Within the valuation, ING subtracts an amount of 20 million, or 5 euros per share, which relates to deferred taxes, this without any explanation or term of the debt. This deduction is also contestable without any further justification or explanation of the anticipated payments.
- The figures per September 30, 2015, were not included since the valuation is only based on these of June 30, 2015 and does not take into account the favorable summer period, while these figures are known by the bidder and independent directors. It is not acceptable that Spadel and the bidder refuse to communicate the latest figures as at September 30, 2015, at least the key figures and the net cash position.
All interested shareholders can sign up at Deminor by sending an e-mail to info@deminor.com and give a formal mandate to represent their participation in Spadel.
