As far as a full buyout, the CEO stated partial equity $30 to full
buyout at $70.
Given they are not going to be profitable this year (at this
time---that will change
should the debt be retired) that $70 is high. But there is a process
going on. Partial
equity deal is the beginning of the process. Should there be more
than one
interested party, and should those parties see how costly it was
not to buy Dekalb
and Myco from the start, they may accelerate that to a full buyout.
The key is,
what synergies happen with ABTX under their wing? This is
where the current
analysts do not have the knowledge to make adequate assesments,
imho. Again, it
is quite said Bonnie Wittenberg is not available to help sort this
out today. Only
the chemical concerns really know what the synergies are or are
not with this 3rd
largest cash crop of ABTX products.
Before being sold, a company must get all the negatives out of the
way, percieved
or real. Given ABTX consolidation teams have decided to
consolidate brands to
2-3, ABTX restructuring charges are most likely excess seeds
they will sell at a
loss to move out of inventory, or donate that seed as well as R&D
that is now no
longer needed or useful and must be written off. This should clean
the slate for a
partner/owner to step in. Having been through an SEC review, an
audited 10K
and now with a CFO who knows the seed business very very
well, who came
from Novartis and is a trained auditor (KPMG) and given ABTX
has not had any
charges for the many companies they have purchased until now,
this looks like
housekeeping and I for one appreciate it.
ABTX is working towards margins in the 40% range through
proprietary seeds (
some as high as 50% margins available now) and with added
biotech (3-5 years
away unless further acquistiions can accelerate this). With today's
23% margin
average and operating costs about the same the company has work
ahead to
reduce (consolidate) operating costs, recognize operations
effeciencies from the
melded 33 companies and increase margins. In rough figures,
once they get to
their stated goals of a projected 40% margin (as has been done in
other seed
sectors effectivley once they were consolidated) that nets 17%
EBIDTA on %500
million or $85 million, or $2.25 a share. This is what an equity
partner/ buyer will
be focusing on, not current earnings. With an equity partner/buyer,
debt for abtx
will be reduced if not bought down completely and the revenue
and bottom line
numbers could grow.
It will be interesting to see what the analysts do tomorrow.
Oppenheimer has been
on the bid quite a bit, Dain and Piper to name a few, were buying
after the
Bloomberg piece was out and the stock bounced and also into the
close. Deutsh
Morgan has been selling since last week. I think it is safe to say,
Wilbur of SSB
will not be raising his rating (vbg). ABTX is in the hands of
Merril Lynch, could
get interesting.
One last thing. I spoke with David Evans well after the close
today, who wrote the
Bloomberg article. I asked him why he thought there were so
many shares short in
ABTX. He said * because they read the articles put out on the
company*. I was
really curious if he felt there was something wrong at ABTX, and
his answer was
he was just reporting the news to give the average investors a fair
shake ahead of
the analysts. Well, while that is noble to a certain extent, if he is
aware of the
power of the press, why not try to be more balanced in the
reporting? David was
reading the Yahoo board when I phoned him. Perhaps he will try
in the future to
feed more than the short side, but to look for balance.
:-)
Lady |
