Opinion of the Independent Financial Advisor - Investor Relations

More documents

Recommendations

Info

The Opinion of the Independent Financial Advisor on the Asset Acquisition of Thai Union Frozen Products Plc.3. The Fairness of Price of TransactionThe IFA evaluates reasonableness of the transaction price based on several approaches to corporatevaluation. Since TUF will pay consideration to the Seller based on the Enterprise Value (EV), ourevaluation on the fair valuation will be drawn in terms of an enterprise value and presented along withspecific merits and limitations cited respective to each of our selected approaches. The opinionregarding the reasonableness with reference to the Transaction Price can be rendered accordingly.Our selected valuation methodologies include the following;1. Book Value Approach2. Market Comparable Approach3. Discounted Cash Flows Approach –DCFFor avoidance of any doubts, enterprise value is equal to the sum of the market value of totalshareholders’ equity and interest-bearing debts minus cash and cash equivalent, reflecting economicvalue collectively claimed by shareholders and creditors as well as minority interest (if any) while theremaining amount of cash and cash equivalent can be utilized to make repayment of outstandingdebts, and/or used to pay out as dividends to the acquirer.The IFA has evaluated the fair enterprise value of MW Brands based on each approach with detailsexplained as the following;3.1 Book Value ApproachBook value approach is referred to as the amounts carried on a company’s balance sheet, which isprincipally prepared in accordance with the historical cost convention of accounting standards. Thus,book value of total assets from the consolidated balance sheet for the most recent fiscal year ending31 March 2010 as audited by the statutory auditor of MWBrands, will be used to determine the fairvalue of MWBrands under this approach. The valuation result can be set out below;Consolidated Financial StatementsFor the fiscal year ending 31 March 2010Book Value of Total Assets Million EUR 559.4Based on the Book Value approach, the enterprise value is equal to EUR 559.4 million. However, thevaluation result respective to Book Value approach should not serve as the main approach todetermine the fair value of MWBrands since it neither captures the company’s earnings potential norreflects a view of fair value of assets under current economic factors, industry trends and managementdecision.Adjusted Book Value approach has come to mitigate its potential drawback that results mainly fromthe historical cost convention of accounting standards since certain adjustments should be introducedas a means of incorporating the impact of off-balance-sheet items and any gain and/or loss in value ofassets and liabilities against the amounts carried on the consolidated financial statements. However,due to the unavailability of recent appraisal report on any of MWBrands non-current assets i.e.tangible and intangible assets as well as in part to the overseas presence of MWBrands, the AdjustedBook Value approach is materially constrained and cannot be adopted as an alternative evaluation.3.2 Market Comparable ApproachThis approach evaluates the fair value of a company on the basis that companies principally engagingin similar nature of business and products are expected to have similar range of price multiples. Assuch, the Market Comparable approach is to first identify the listed peer group with similarity in termsof scale and normal course of business operations and then evaluate the fair value of MWBrands andPage 24
The Opinion of the Independent Financial Advisor on the Asset Acquisition of Thai Union Frozen Products Plc.thus the fair value of the acquisition price will be calculated based on an average of price multiplesrespective to such peer group. The price multiple ratios applied to determining the fair value ofMWBrands under this approach shall include the following multiples;3.2.1) Price to Book Value3.2.2) Historical Price to Earnings3.2.3) Forward Price to Earnings3.2.4) Historical Enterprise Value to EBITDA3.2.5) Forward Enterprise Value to EBITDAIdeally, any listed company forming part of the peer group should have tuna-based product portfolioand engage regionally in the seafood market. However, our findings have suggested that no suchcompany listed on the Thai bourse is present with these operational characteristics that can trackclosely to the business fundamentals of MWBrands. Therefore, we include both Thai peers andinternational peers into our analysis. Thai peers in the seafood and fish related business are includedto reflect the multiples level in Thai market as it is the listed stock exchange of TUF and internationalpeers in other international stock exchanges are included to reflect the landscape of seafood market inEurope representing the operating territory of MWBrands and other international market. The list ofpeer group chosen by the IFA for the evaluation of the fair enterprise value of MWBrands under thisApproach is set out below;Company NameDomestic Peer GroupBloombergTickerCountry Market Cap Main Line of ProductsThai Union Frozen Products PCL TUF TB Thailand THB 46,587 Million TunaAsian Seafoods Coldstorage PCL ASIAN TB Thailand THB 1,469 MillionTropical Canning (Thailand) PCL TC TB Thailand THB 1,300 MillionInternational Peer GroupFrozenFish/Shrimp/Shellfish/SquidCanned Tuna andother seafood productsMarine Harvest ASA MHG NO Norway NOK 17,713 Million SalmonNippon Suisan Kaisha 1332 JT Japan JPY 80,945 MillionDongwon Industries 006040 KS Korea KRW 410,310 MillionPacific Andes 1174 HK Hong Kong HKD 4,013 MillionSource: BloombergFrozen and processedseafood productsFrozen and processedseafood productsFrozen and processedseafood productsIt should be noted that although the comparables are collected from the peers in the different countries,the price multiple ratios still could be used as part of the fair value calculation since it does not affectby the difference in the currency and exchange rate of the comparable companies in each countries.The descriptions of the international peers group are summarized as follows:a. Marine Harvest ASAMarine Harvest ASA, is a Norway-based seafood company. It offers farmed salmon and processedseafood to customers in approximately 70 markets. In addition to fresh and frozen salmon, MarineHarvest offers a range of other products, such as coated seafood, ready-to-eat meals, finger food andsmoked seafood. The company also farms trout and white halibut. Marine Harvest’s operations arestructured in five main business units. MH Norway includes fish farming operations and salesoperations in Norway, comprising Atlantic salmon production and sales, as well as processing facilitiesthat produce fillets. MH Chile includes operations in Chile and in the United States, comprising fishfarming and processing facilities. MH Canada and MH Scotland produce and sell Atlantic salmon. MHVAP Europe processes and sells seafood based on Atlantic salmon, whitefish and other seafood inPage 25
Page 1: (Translation)The Opinion of the Ind
Page 8 and 9: The Opinion of the Independent Fina
Page 21: The Opinion of the Independent Fina
Page 48: The Opinion of the Independent Fina

Opinion of the Independent Financial Advisor - Investor Relations

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?