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Last edited by biker; 30-06-2021 at 10:31 AM.
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ArborGen Announces Strategic Review
30/6/2021, 9:15 am MKTUPDTE
30 June 2021 - Global advanced genetics seedling company, ArborGen Holdings Limited (NZX:ARB) (ArborGen or the Company) advises that the Company has received a confidential, non‐binding, indicative, incomplete and highly conditional proposal from a credible third party to acquire all of the shares in, or assets of, ArborGen by way of a scheme of arrangement or other alternative acquisition structure (the Proposal). A sub-committee of independent directors of ArborGen was appointed to assess the Proposal (the Sub-Committee) and has concluded that, based on the information currently before the Sub-Committee, the Proposal materially undervalues the Company. In light of this, the Board has decided to commence a strategic review. The objective of the strategic review is to consider all options to unlock value for the benefit of all shareholders. These options could include (but are not limited to) a potential sale of all of the shares in, or all or some of the assets of the Company, or a US listing.
ArborGen is the largest commercial global seedling supplier and a leading provider of advanced genetics, for the forest industry. Employing state-of-the-art technology, ArborGen is developing high-value products that significantly improve the productivity of a given acre of land by enabling our customers to grow trees that yield more wood per acre with greater consistency and quality in a shorter period of time.
It specialises in loblolly pine (US and Brazil), radiata pine (New Zealand and Australia) and eucalyptus (Brazil and Australia) plantation forestry species. It has 18 seedling nurseries, 12 seed producing orchards and overall production capacity of 540 million seedlings annually globally.
As set out in the 27 May 2021 market announcement (https://www.nzx.com/announcements/372976), ArborGen’s 2021 financial results outlined a significantly improved outlook for the company driven primarily by increased availability of its proprietary MCP seedlings in the US.
With increased availability of proprietary advanced genetic products (MCP seedlings) in the US, improving markets in all regions, and increased demand for proprietary genetics, ArborGen believes that it is now well positioned for accelerated growth.
PwC has been engaged to assist ArborGen in undertaking the strategic review.
There is no certainty that any transaction or other change will result from the strategic review.
ENDS
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US listing to hopefully unlock true value.....
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Member
Great news but I would be extremely disappointed with a take over, an odd thing i find myself saying but remember these things only occur when a buyer sees value.
If anyone actually bothers to take the time to back solve for MCP margins and figure out the earnings potential of ARB you'll quickly realise that those old edison research valuations aren't as crazy as they once seemed.
I would happily hold to see the potential earnings come into fruition in 2023 and beyond. ARB still has massive upside potential.
Fingers crossed this results in a US listing rather than a full take over.
Last edited by TheHunter; 30-06-2021 at 11:30 AM.
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How things have changed (from 2011)......Rubicon's stake in the biotechnology firm ArborGen could be diluted if ArborGen succeeds in raising up to $US92 million through an initial public offering in the United States.
ArborGen has operations in New Zealand, and is a third-owned by the New Zealand listed forestry investor Rubicon, which also has a 58% stake in Tenon. It was once part of Fletcher Challenge.
ArborGen has filed a registration statement with the US Securities and Exchange Commission detailing its plans to offer 5.12 million shares at between $US16 and $US18 each, with the aim of raising between $US82 million and $US92 million.
That would dilute Rubicon's ownership in ArborGen to 27.24%.
Goldman Sachs and Citi will manage the proposed offering.
Rubicon's share price is unchanged at $1.20.
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So, they've been given an offer so terrible that they've been startled into a strategic review...
I do think that this story has finally reached an inflection point as far a sales of MCP varieties go. My question has always been is the product itself profitable... & will there ever be a return on capital outlay. All they've proved thus far is standard variety seedlings are not a great wealth creator for a listed company
I do hope there's a silver lining at the end of this tedious journey. Best of luck to holders
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Up 30% today to 28c. Off a low base but at least some better volume. Interest at last?
Probably not a lot of volume for sale until the share price gets out of the 20’s and 30’s
and into the 40’s and 50’s cps
Last edited by biker; 30-06-2021 at 01:13 PM.
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Member
 Originally Posted by t.rexjr
So, they've been given an offer so terrible that they've been startled into a strategic review...
I do think that this story has finally reached an inflection point as far a sales of MCP varieties go. My question has always been is the product itself profitable... & will there ever be a return on capital outlay. All they've proved thus far is standard variety seedlings are not a great wealth creator for a listed company
Remember ArboGen's business model is based on proprietary genetics and R&D. They have acquired nurseries, developed their MCP genetics and are now converting supply to MCP. OP has never been the main strategy to grow earnings; MCP has 6-8x higher gross margin on an absolute basis and indeed, 2023 is the major inflection point for MCP supply as shown below. An additional ~100m MCP seedlings at these margins creates significant earnings growth.
In my opinion, this potential growth is not fully understood by the market and I suspect this third party buyer has figured this out.
tempsnip.png
Last edited by TheHunter; 01-07-2021 at 04:59 AM.
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Originally Posted by TheHunter
In my opinion, this potential growth is not fully understood by the market and I suspect this third party buyer has figured this out.
ARB have been promoting their growth in coming years. Is it that the growth isn't understood by the market or just that the market is wary of over promising and under delivering, as they have done for many many years.
ARB is saying that this time is different but understandably the market doesn't yet believe the promises.
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