A short update about LanTroVision (SGX:BJK), which I wrote about almost two years ago. LanTroVision has just received an acquisition proposal from MIRAIT Singapore, which is a wholly owned sub of MIRAIT Holdings Corporation (TYO:1417). LanTroVision shareholders will receive S$3.25 in cash per share. The total acquisition price wil be around S$180 million, including expenses.
The acquisition will need to be approved by LanTroVision’s shareholders (bold text mine):
the approval of the Scheme by a majority in number of Shareholders representing not less than three-fourths in value of the Shares held by Shareholders present and voting either in person or by proxy at the Court Meeting
MIRAIT Holdings Corp is a publicly listed Japanese company with a ¥74 billion (~$622 million USD) market cap.
Unfortunately I’m not currently a LanTroVision shareholder. I did review the latest quarterly results that were released a few days ago and thought that shares were getting pretty cheap again. I’m simply running low on cash right now and I like the things I currently own. Now is a time for me where ideas are more plentiful than cash, a very different situation from just six months ago.
This looks like a good deal for MIRAIT Holdings. LanTroVision is holding ~S$91 million in cash and has just $40 million of total liabilities (no debt). The latest quarterly results looked fine as well, showing a profit of $5.3m attributable to LanTroVision shareholders for the quarter ended Dec. 31, 2015 and a $9.1m profit for the six-month period. The company continued to show strong free cash flow as well, generating about $7m for the six-month period. The company seems capable of consistently generating $10m-15m of free cash flow per year. If I apply a multiple of 10 to this range, which does not seem aggressive for a company that has shown some growth and then add the excess cash, I get to a value which comfortably exceeds the offer by MIRAIT.
Still, I would expect LanTroVision shareholders to accept this deal. MIRAIT has received the support from the management of LanTroVision and they will vote in favor of the acquisition. They own ~39% of the outstanding shares. Given that the offer still represents a 43% premium over the share price just before the deal and the very volatile Asian markets we’re seeing currently, I think they will get the required votes from the other shareholders. It probably makes sense for everybody involved. If you are a shareholder it is not a bad thing to get some cash coming in, or perhaps sell in anticipation of the completion, just when markets are seeing some turmoil and bargains are becoming a little easier to find again.
Disclosure: no position in LanTroVision or MIRAIT Holdings Corporation