Dragon One's offer 'high'
Advisory Plus, an independent financial adviser, said that a price offered by Dragon One Plc (D1) to acquire a majority stake in Application Hosting Services (A-Host) was inappropriate - as it was higher than a suitable price range.
However, the company's audit committee argued that it was a reasonable price, though higher than the calculation of the independent financial adviser, according to a filing with the Stock Exchange of Thailand (SET) yesterday. Advisory Plus said the share price of A-Host should be in a range of Bt509.69-Bt7,290.64 per share, based on several methods of calculation. Dragon One offered to acquire 109,994 shares of Application Hosting from Bunprasit Tangchaisuk and IEC Business Partners at Bt2,454.54 in a deal worth Bt269.98 million. "The share prices derived from the book value, adjusted book value, and price to book value approaches are lower than the acquisition price. In the meantime, the share prices calculated by the price-to-earnings ratio, enterprise value to earnings before interest, tax and depreciation, and present value of future free cash-flow approaches are higher than the acquisition price," the independent financial adviser said. "We said that the present value of future free cash-flow is the most appropriate method to figure out the share price. Our reasons are that this approach takes into account the potential for business operations and profitability of A-Host in the future. The proper share price by this approach is in a range of Bt2,083.74-Bt2,377.17 per share, which is lower than the acquisition price of Bt2,454.54." However, to allow Dragon One to retain its listing status, the independent financial adviser recommended that shareholders approve the transaction to acquire A-Host shares, the company said. The acquisition is subject to approval from the company's shareholders at an "extraordinary" meeting due to be held on September 25. Earlier, the SET ordered Dragon One to make itself qualify for listing status, as the company has no assets and business to generate income - otherwise its stock will be de-listed. In the filing, the company's audit committee expressed the opinion that shareholders should approve the deal as Application Hosting would make Dragon One qualify as a listed company and its business was promising with good performance and profitability. Meanwhile, the SET has warned Dragon One's shareholders to study circumspectly the opinions of both the independent financial adviser and the audit committee. Siriporn Chanjindamanee
The Nation
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