Thursday, July 21, 2011

Charlies Group Ltd: Grant Samuels recommend Asahi Group offer

Offer documents and all associated paperwork in relation to the takeover of Charlies Group Ltd [CHA.NZX] by Asahi Group Ltd [2502:JP] are available here to download.

The independent adviser’s report prepared by Grant Samuel & Associates Limited recommends the takeover for the following reasons:

A value range of $121.3 million to $133.3 million has been attributed to Charlie’s Group’s business operations. This valuation range is an overall judgement having regard to:

*the earnings multiples implied by the prices paid for comparable businesses and the share prices of comparable listed companies;

*the attributes and earnings outlook for Charlie’s Group; and

*the consolidation of the non-alcoholic beverage sector in Australasia.

The valuation represents the estimated full underlying value of Charlie’s Group assuming 100% of the company was available to be acquired and includes a premium for control. The value exceeds the price at which, based on current market conditions, Grant Samuel would expect Charlie’s Group shares to trade on the NZSX in the absence of a takeover offer or proposal similar in nature to the Asahi Offer. The valuation reflects the strengths and weaknesses of Charlie’s Group and takes into account the following factors:

*the strong cash flows and high gross margins across the portfolio;

*the strong portfolio of brands;

*the rapidly growing presence in the grocery segment in Australia;

*the Group’s domination of the organic sector in New Zealand;

*the innovative and creative management;

*the potential for growth beyond Australia; and

*a good pipeline of new products.

It looks like a good offer by Asahi, based on the future trading of Charlies and its good growth prospects and multiples paid for several beverage companies in this part of the world over the last few years; the Kirin Holdings Ltd [2503:JP] buyout of Lion Nathan and Coca Cola Amatil Ltd [CCA.ASX] purchase of Fosters Group Ltd [FGL.ASX] assets just two examples.

CHA investors would be advised to take the offer given the absence of any competing offer for the company.

Charlies was a pick at 17.5c in Share Investors 2011 Stock Picks.

Takeover Documents

Charlies Group @ Share Investor

Charlies Group Ltd: Asahi make takeover offer
Share Price Alert: Charlies Group Ltd
Share Investor Q & A: Charlies Group CEO Stefan Lepionka
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Charlies Group: A Triumph of Style over Substance
Charlies juicing through Shareholder cash

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c Share Investor 2011

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