Kirin bid for Lion Nathan undervalues brewer

So Kirin is making an offer for the rest of Lion Nathan Ltd PDF [LNN.NZ] that they don't already own. They are offering A $12.22 per share therefore valuing the company at about $A6.5 billion.

The LNN board is recommending the offer but are shareholders getting a fair deal?

Lets do a comparison of the recent buyout last year of Anheuser Busch by InBev. In that deal InBev bought its target for close to US $50 billion with valued the company at approx 15X EBITDA according to website Blogging Stocks.

The Kirin/Lion deal values Lion at 12.5 X EBITDA according to Michael Feller from the Business Spectator

"The price Kirin is offering effectively values Lion at $6.5 billion on an equity basis and $8.2 billion on enterprise value, as well as an FY09 consensus forecast EBITDA multiple around 12.5 times".

The EBITDA comparison then between the two deals shows an enormous gap in the prices paid for the two targets, with Kirin shelling out 20% less to take control of Lion than what InBev paid for Anheuser Busch last year.

If a comparable 15 X EBITDA figure was offered by Kirin then the per share price should be closer to $14.66 per share.

Figures aside the iconic status of both target brewers is very strong and there should be a premium for that.

Also the tough economic times we are currently facing show fully the benefits and therefore the value of having brewing assets-they do well during booms and better in recessions!

The long-term benefits of good brands must also be accounted for in this takeover price.

Clearly then, Lion shareholders are being seriously under represented by Lion Nathan management as they have agreed the price to be paid is sufficient and another higher offer must be made for control of the company.

Lets hope the independent report into the offer turns out to be a definite no at the current Kirin offer price.

Shareholders should reject the bid.


Recent Share Investor Reading

• Bank Guarantees: The Return of Bryce
• 535 Ex Trans Rail Holders due $10 million
• Sky City CEO doubles down
• More Moola Please!
• I'm Buying: 2009

• Discuss this topic @ Shareinvestorforum.com

c Share Investor 2009

Cullen bows out leaving a bloody mess behind

One of New Zealand's most destructive politicians in our history has his final day in Parliament today.

Michael Cullen presided over an economic boom which had its genesis in the 1980s and had not been seen for generations. He then taxed and spent the economy into such a hemorrhaging economic state it will take another generation to get back to real economic growth.

His legacy is a massive crumbling State service, bloated with civil servants with nothing constructive to do and as a result middle income families with high debt taxed to the hilt to pay for the whole thing!

A venal, nasty, arrogant incompetent evil socialist prick who never had a real job in his whole life - is there any other kind of socialist?

The post office is the perfect place for him to go.

I should have tripped him when I had the chance. 

c Political Animal 2009

Bank Guarantees: The Return of Bryce

I mentioned to one of my email correspondents that I would return in a few months to see my bank manager, "Bryce" at the ASB Bank in Albany after having seen him first late one Thursday at the end of February to re-negotiate the terms of our rather large mortgage.

I did, sort of.

This time Bryce was unwilling to see me after my hard workday so we discussed the matter over the mobile.

I would have preferred to see him in person but he insisted I couldn't.

I pointed out to him, again, that the New Zealand taxpayer was guaranteeing banks in New Zealand so they could borrow cheaper money from abroad to lend to us.

Bryce pointed out to me that it wasn't the taxpayer that was going guarantor,it was in fact the Government.

After pointing Bryce to the error of his ways over the fact that Government and the taxpayer were one and the same (Bryce still doesn't think they are) I thought out loud that wasn't it funny that as a borrower from his bank, the ASB, that I was now a guarantor for my loan but also as a taxpayer I was going guarantor for his bank to borrow the same money to lend back to me.

This seem to confuse Bryce but it was very clear to me.

I added what I said at our Thursday evening meeting in February, that we are clearly living in exceptional economic times, something Bryce agreed with during the mere half dozen times I repeated that same mantra.

Bryce said I would be breaking my contract with the bank if we re-negotiated without an outrageous bank fee and I agreed with Bryce at that stage but had to point out that the terms of our contract had clearly changed because I was now going guarantor for both his and my borrowing, hence making it cheaper for Goldstein and his fat American buddy to borrow money in the first place.

We both became dizzy as I reiterate the above several times (I don't let go once I sink my teeth in) to no effect at all.

The bank will not negotiate at all, that is all he had to say from the get-go

Before we both left the conversation, Bryce pointed out that the bank had been around for 100 and something years and was "very safe" immaterial of any taxpayer/Government guarantees and then I asked him why then did the bank sign up to the guarantee and he kindly pointed out because that is what the other banks were doing and it wouldn't "be fair" to the ASB if they didn't join the party.

Fair... mmm, yes but, why?...

A asked whether the bank had these sort of guarantees during the 1930s, he didn't know, I left none the wiser and Bryce left probably wishing he hadn't returned my call.

I don't think Bryce is going to take another call from me.

I will however have another go in a few more months.



More Banking Madness @ Shareinvestor

Westpac: I'm Thinking of Returning

ASB Bank: Customer "Service"

Bryce the Banker: The Final Insult
Banks not participating in Recession
Bank Guarantees: Time for banks to return the favour
The Return of Bryce
Banking Madness!

Discuss this topic @ Share Investor Forum

c Share Investor 2009

535 Ex Trans Rail Holders due $10 million

I hate to see people lose money and not get money that is due to them.

The Securities Commission is actually earning its money in this case - I knew they were good for something!

Some 535 shareholders are still eligible for compensation from settlement of the Tranz Rail insider trading case. The names of these shareholders are listed on the Commission's website at www.seccom.govt.nz. They are invited to contact the Commission by 24 July 2009 for information about how to claim their compensation. Entitled shareholders will need to verify their identity and shareholding details. Full Press Release

The claim relates to the Fay Richwhite Trans Rail insider trading case where the aforementioned made a $27 million payment to the Securities Commission, without admitting guilt, to insider trading.

The case was unable to be proven by the Commission but there is clear evidence of the insider trading and most of us are aware of information that points to Messrs Richwhite's guilt.

The claim for those 535 shareholders with money outstanding is time limited, so get off your butt and contact the Securities Commisssion before the State gets it.

Just as an aside, funny that last year the same company was bought on behalf of the taxpayer under similar fraudulent circumstances by one Michael Cullen.

I wonder if the SEC COM will be chasing Mr Cullen?

Related Links

Securities Commission - Make your claim here
List of eligible shareholders

Recent Share Investor Reading

• Sky City CEO doubles down
• More Moola Please!
• Im Buying: 2009
• Auckland Airport needs main focus on its core business
• Investors have reached a Tipping Point

• Discuss this topic @ Shareinvestor.net.nz

Related Amazon Reading


The Stock Market Mercenary by Daniel L. James
Buy new: $24.95 / Used from: $18.86
Usually ships in 24 hours

c Share Investor 2009