LTAP has walked away from its proposal to acquire the company for $10.42 a share. Graincorp will now divest the bulk liquid terminals and pursue a de-merger of the malt division.
There was always a risk a potential suitor would discover something negative that is not easily visible, but the broker continues to believe the de-merger proposal will unlock value and moves its target price to sum-of-the-parts valuation, at $10.35 versus the $10.42 takeover offer.
Buy rating maintained. The company will report its first half results on May 9.
Sector: Food, Beverage & Tobacco.
Target price is $10.35.Current Price is $8.15. Difference: $2.20 – (brackets indicate current price is over target). If GNC meets the UBS target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
This excerpt is taken from The Australian Broker Call. Copyright FN Arena, visit www.fnarena.com for a free trial. http://www.fnarena.com/ts.cfm?R=EQUITYCAFE
