By Phil Boeyen, ShareChat Business News Editor
|
Thursday 8th November 2001 |
Text too small? |
In a November Australasian newsletter UBS Warburg says clients should sell overweight positions in the beverage company back to neutral, given the current market premium to the offer price of $2.35.
"However, we suggest investors should wait as long as possible in order to assess FRU management forecasts from the independent valuation report and keep themselves "in the hunt" on the low probability of an alternative bid arising before choosing whether to exit their position entirely before the offer expires," advises the newsletter.
UBS Warburg points to Frucor's recent comments that it requires a strategic partner internationally (outside Australasia), given its lack of international distribution penetration and financial resources to fund an aggressive expansion programme for V.
"We believe this makes the Groupe Danone offer even more timely given its global presence and balance sheet strength. It also supports our view that FRU may be required to offer an equity stake to attract any serious "buy-in" from a global player."
At its AGM last week Frucor told shareholders that although it was making headway in the UK market with its V energy drink, the market there has been shrinking and the major players will have to spend more money on marketing and advertising to ensure segment growth.
"All this makes Groupe Danone's offer extremely timely," says UBS Warburg.
"Not only does Danone have a global beverage distribution network, but it also has a balance sheet to support an aggressive advertising campaign to launch V on a truly global scale."
An independent appraisal report on Danone's offer is due next week.
No comments yet
