Automotive supplier Ventra Group Inc. has recommended its stockholders reject a buyout offer from Proprietary Industries Inc., calling the offer ``opportunistic and coercive,'' and saying it does not reflect the company's full value.
Proprietary, a Calgary, Alberta, investment company, offered May 14 to buy 50.1-100 percent of the shares in Ventra, an Oakville, Ontario, molder of a variety of exterior automotive panels. The offer would provide shareholders with 0.44 share of Proprietary stock for each share of Ventra.
That simply is not a good price, said Ventra executives, who reviewed the bid along with financial advisers from BMO Nesbitt Burns Inc. and released their findings in a May 28 statement. At that price, Ventra shareholders would control 26 percent of the shares in Proprietary - but Ventra products would account for 99 percent of the company's consolidated operating results, Ventra said.
The notice goes on to claim the offer is ``incomplete and misleading'' as well as ``opportunistic and coercive and is highly conditional'' because it allows Proprietary to terminate the offer without any obligation to buy any additional Ventra shares.
Proprietary officials, however, counter that their offer would place a value of C$1.36 (US$0.88) on each share of Ventra stock - a solid premium compared with the current selling rate of C$1.10 (US$0.71).
``If the Proprietary offer does indeed undervalue Ventra, [directors] should have little difficulty in bringing forth a competing bid,'' Proprietary fired back.
Further, Ventra is trying to ``undermine'' a legitimate offer by confusing shareholders about common business practices, Proprietary maintained.
``Proprietary is confident Ventra's shareholders will judge the offer on its business merits and believes that Ventra's delays and legal maneuverings are the antics of a management group bent on self-preservation,'' it said.
Ventra placed itself on the market in March when its low stock price prompted speculation that it would be bought out.
Executives created a special committee to look into potential purchases of all or part of the company. That process is continuing, said Ventra Chairman Spencer Lanthier.
At the same time, the company's financial performance, which prompted the low stock price, is improving, he said during a May 23 conference call with investors.
A tough 2000 forced the business to back out of a plan to buy European operations, and left Ventra with a loss of C$68 million (US$43.2 million) for its last fiscal year. But since its 2000-01 fiscal year began Oct. 1, it has cut C$10 million (US$6.47 million) in debt.
Ventra ended its second quarter with profit of C$2.1 million (US$1.36 million) and saw its sales climb slightly for the first half, to C$347.6 million (US$224.9 million) - even though North American auto sales fell.
``Performance comes thanks to tough decisions in the last few months,'' Lanthier said. ``Ventra Group is a viable Tier 1 supplier. The board remains committed to the company.''