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Original Source: FD (FAIR DISCLOSURE) WIRE
. Lisa Schnorr, Constellation Brands, VP IR . Richard Sands, Constellation Brands, Chairman & CEO . Mark Swartzberg, Legg Mason, Analyst . Michael Van Aelst, TD Newcrest, Analyst . Tim Ramey, D.A. Davidson, Analyst . Tom Summer, Constellation Brands, EVP & CFO . Jim Durran, National Bank Financial, Analyst . David Hartley, Blackmont Capital, Analyst . Rob Davis, PSAM, Analyst . Bryan Spillane, Banc of America, Analyst . Raymond Lai, Raymond James Canada, Analyst
On 10/18/05, STZ announced that it is planning a cash takeover bid of all of the outstanding shares of Vincor for $31 per share and the offer is expected to formally commence on 10/20/05. However, Vincor is offering vague references to an unclear process, unrealistic suggestions of potential synergies, and the unrealistic hope that STZ will negotiate against itself.
A. Key Data From Call 1. Cash takeover bid price for all of the outstanding shares of Vincor = $31 per share.
S1. Takeover Bid of Vincor (R.S.) 1. Opening Comments: 1. On 10/18/05, the Co. announced that it is planning a cash takeover bid of all of the outstanding shares of Vincor for $31 per share.
2. On 10/19/05, the Co. filed its takeover circular with security
regulators in Canada, and delivered a copy of its circular to
Vincor. 3. The offer is expected to formally commence on 10/20/05, as the clock starts ticking with the placement of the formal of ad. 2. About Offer: 1. The Co. is offering a 39% premium to the unaffected trading price, which it can pay promptly and without any financing or due diligence conditions. 2. Vincor is offering vague references to an unclear process, unrealistic suggestions of potential synergies, and the unrealistic hope that STZ will negotiate against itself. 3. Since the six weeks that STZ made its initial proposal to acquire Vincor, Vincor's Board and management have rejected STZ's efforts to complete a negotiated transaction. 1. Following STZ's publicly announced proposal, Vincor announced a so-called process to auction the co.
2. In the three weeks since then, Vincor has made no attempt to contact STZ to advise the Co. of their process. 4. On 10/18/05, STZ's financial advisers called Vincor's financial advisers.
1. If a process does exist, STZ has been excluded and the Co.
questions whether there are any buyers out there that are willing to pay what STZ is offering. 5. Given the absence of any progress, STZ felt compelled to make its offer available directly to the Vincor shareholders, so they can accept this opportunity to realize superior, immediate, and certain value for their shares.
1. Vincor's shareholders now have a clear choice; the choice is cash or uncertainty. 1. STZ is offering $31 cash. 2. Vincor is offering a prolonged and potentially dangerous period of doubt.
3. Vincor's Response to the Announcement of the Cash Takeover
Offer: 1. This is the second time Mark Hilson has said that STZ gave a price indication of $36 or higher. 1. However, STZ never said it was willing to pay $36 or higher; the only offer made is $31 per share. 2. Mark Hilson also stated, again, STZ commenced a process to explore all possible alternatives to create shareholder value and intends to see the process through to completion.
1. However, STZ has tried to find out what this statement means
and suggest that Vincor's shareholders deserve to know the facts and should ask the Board the following questions: 1. What is the process? 2. How long will this so-called process and the resulting period of uncertainty last? 3. Are there any interested parties other than STZ? 4. If so, have they been given confidential information? 5. If so, was that party willing to pay more than STZ's offer of $31 per share? 6. What is the stock worth in the absence of STZ's offer and any other alternatives? 2. Based on the information available to STZ as on 10/19/05 (and STZ has reviewed all the publicly available information from many sources), STZ believes that its $31 per share cash offer is not only fair and full, but it's the best alternative available to Vincor's shareholders in terms of value and certainty.
3. The price is a 39% premium of Vincor's closing price on 09/08/05, the day before STZ made its initial proposal to acquire Vincor. 3. According to Vincor's own investor presentation, STZ's offer represents a 12.3 times Vincor's last 12-month EBITDA and an 18.6 times their last 12-months EPS. 1. It also represents a substantial premium to the median target price for Vincor as a stand-alone co., as determined by the 11 research analysts who covered Vincor prior to STZ's proposal. 2. On 09/27/05, before STZ's proposal was made public, the median 12-18-month target price was $27 per share. 3. As on 10/19/05, Vincor's underlying fundamentals remain completely unchanged or may be worse as a result of the uncertainty and fear they have created. 4. STZ's offer is both fully financed and not subject to any diligence. 1. STZ's offer is expected to commence on 10/20/05 and to be open until 5 PM Toronto time on 11/28/05, shortly after which Vincor's shareholders could receive the $31 in cash. 4. Reasons for the Compelling Offer of $31 Per Share: 1. Vincor's brands are, for the most part, small and national in their focus. 2. Vincor has significant …