Ian Trahar's bid for window furnishings group Kresta Holdings has been dealt a severe blow with an independent expert finding the offer neither fair nor reasonable.
Ian Trahar's bid for window furnishings group Kresta Holdings has been dealt a severe blow with an independent expert finding the offer neither fair nor reasonable.
The report by Deloitte found that the fair market value of Kresta's shares were between 40 cents and 48 cents each, at least 23 per cent more the 32.5 cent per share bid Mr Trahar made last month which valued the company at $46.9 million.
And that valuation did not take into account the potential benefits of a mooted merger with the private interests of Mr Trahar. He had previously sought to merge his Arlec electrical goods importing business with Kresta, though he took that deal off the table last year.
The report's valuation was determined on the basis of a 30 per cent premium for control.
Deloitte also concluded that there do not appear to be any compelling reasons to accept the offer despite it not being fair.
However, Deloitte also acknowledged the absence of other bids and the lack of liquidity in the stock were issues if the bid failed.
"In the absence of an alternative offer and in the event that the takeover offer is unsuccessful, it
is likely (at least in the short term) that Kresta's share price may fall to around the levels
achieved prior to the announcement of the takeover offer," Deloitte said.
"We do not see any catalyst at the moment to suggest that the share price will increase in the short to medium term in the absence of a clearly defined strategy and an improvement in discretionary retail demand in the Australian economy."
Mr Trahar has been at the centre of a boardroom stoush with key shareholder Hunter Hall.
The two groups had a falling out regarding voting strategies at Kresta's annual general meeting which prompted Hunter Hall to requisition a meeting to dump Mr Trahar, who was then chairman, and its own nominee to the board Peter Hatfull.
Mr Trahar quit as chairman and launched a bid. Kresta also successfully sought court orders to delay the meeting to vote on the directors until shareholders had had a chance to review the independent expert's report on the bid.
A spokesman for Mr Trahar said the Perth businessman was reviewing the report and would wait until he'd seen the target's statement before deciding on how to react.