Jeffrey B.: re CALM, MIKL
Nuts. Need some help clarifying exact price MIKL paid. Wording is:
"On February 26, 1997, the Company completed the acquisition of Papetti's Hygrade Egg Products, Inc. and affiliated entities (collectively "Papetti's")... Total consideration of $83,174,000, together with the assumption of $22,825,000 of notes payable and long-term debt, was delivered through the issuance of 3,195,455 shares of newly issued common stock valued at $38,859,000, and $44,315,000 in cash and closing costs. The total consideration delivered exceeded the fair value of the net assets acquired by $63,468,000, which has been recorded as goodwill and will be amortized on a straight line basis over 40 years."
enterprise value was 83+23= 106M? but "total consideration" only refers to cash/stock actually paid out? Total consideration was 63M over "fair value" (what's that mean??) of "net assets". I assume it means bv = fair value of net assets. Does that seem fair to you guys? -gg-
I'm not even sure that bv's for private vs. public companies are really comparable. Public co may want to max book value for stockholder reports. Private will minimize to keep taxes -- bus.?, inheritance? - low??
Price per sales which you mention does seem to be a better measure. Unfortunately, it's not broken out in the 10Q, and so it's commingled with increased prices, sales, additional purchases, and so on. My rough guess is that egg production net sales was 43% of $455M in 9mo. sales of '96 and 62% of $679M of 1st 9mo of '97. That's about a $224M swag from '96 to '97, some of which includes Papetti's - how much, I don't know. If I'm off by half, then the MKL paid (enterprise value) 106M for $112M in sales or about 1X sales. I am running amok here -g-. And there's no stopping me now -g-. So for CALM, at 1x, that's a $290M sales = purchase price. Backing out the 58M in debt, the acquirer would assume, that leaves $242M to offer the stockholders, which equates to....$19 per share. 3x the current $6 stock price? Uh... I don't think so. You goofed somewhere Senior!! Maybe the whole
$224M swag from '96 to '97 could be included. That'd mean an acquirer would offer about .47x sales of 290 or 137. Which after debt assumption is $6. So stock is at fair value -g-
Jeffrey FYI, here's what MIKL says about their feed costs: "Feed costs, which represent roughly two-thirds of the cost of producing an egg, were lower in the 1997 period than in the 1996 period, due principally to lower corn prices, which benefited margins." Somewhere else in their report they say that shell egg sales to others are only 7% of their business.
I'm starting to put so much work into this CALM analysis that I'm almost committed to buying some of the thing :>). |
