Del Monte Pacific

[CityFarmer]

Let me share a view. 

First of all, there are good reasons to believe, "1+1>2" in the acquisition. Next, will the company achieve it, soon enough, before the creditors' confidence run out?

There are huge synergy between the two companies, both in sales expansion and cost reduction. For e.g. DMPL is able to enhance its US market share, by leveraging the newly acquired DMFI. The cost reductions can be achieved by economic of sales, and optimization of processes.

What is the "gain", to justify the acquisition? Let's estimate.

The acquisition shouldn't destroy shareholder value. A good reference of shareholder value, is the reference price of the recent right issue, which has partly funded the acquisition. The reference price is the theoretical ex-right price, after taking into considerations of the raised proceed, and volume-weighted average market price. The reference price is S$0.409 per share, thus market cap of S$815 million, or US$573 million. The current net debt is US$1859 million. By a simplified formula of EV = MC + net debt

At EV/EBITDA = 10, EBITDA = US$243 million
At EV/EBITDA = 07, EBITDA = US$347 million

The combined EBITDA, (based on Mr. d.o.g's post) is US$225 million, and the current adjusted EBITDA is US$139 million.

Is the estimated EBITDAs, a mission impossible for the company?

IMO, the EBITDAs should be feasible, but definitely not "done-deal" targets, especially with the current global market uncertainties. I am more concern on the survival, due to the debt, before the targets are achieved.

(not vested, and unlikely to invest due to the leverage)