Fliway takeover at upper end of independent adviser's range
By Paul McBeth
Nov. 22 (BusinessDesk) - A $55.4 million takeover of NZX-listed logistics firm Fliway Group is at the upper end of an independent valuation range, and unless a better bid emerges the pros outweigh the cons, according to the deal's independent adviser report.
KordaMentha valued Fliway's shares at between $1.04 and $1.24 after putting the firm's financial under the microscope, putting Singaporean logistics firm Yang Kee Logistics' $1.22 per share offer at the upper end of the range. The deal has the backing of Fliway's board and its majority shareholder, chief executive Duncan Hawkesby, has already thrown his weight behind the transaction. Shareholders will vote on whether to approve the transaction, via a scheme implementation agreement, at a special meeting in Auckland on Dec. 8.
"In our view, unless a superior proposal is forthcoming, the positives of approving the scheme outweigh the negatives," KordaMentha said in its report. "In particular, the proposed consideration is within our assessed valuation range and furthermore lies towards the high-end of our valuation range."
The offer was a 13 percent premium to the trading price prior to the announcement. However, the shares were sold at $1.20 apiece in an initial public offering, the bottom end of the indicative range in March 2015, which valued Fliway at $54.5 million. The shares recently traded at $1.20.
KordaMentha said if shareholders choose to reject the offer, it would likely reverse any gains since the announcement, although the longer-term consequences were harder to predict. It sees the near-term outlook for Fliway's joint venture with UPS and its international operations were relatively flat, and while the domestic business will likely bounce back from a poor 2017 financial year, there were risks surrounding that business.
"It is possible that Fliway shareholders may be able to realise greater value through a change of control transaction in the future. However, it would be presumptive to assume that one will eventuate," the report said. "We understand that no alternative proposal has been forthcoming and that there are very few potential acquirers of Fliway, given its specialised freight services."