Oakwell

Oakwell: shares are up 11.3% at $0.089, in active trade. No overnight news to highlight, but the latest announcement on 21 Aug 2013 regarding the disposal of the group’s distribution business to the Sonepar Group (a logistics and electrical eqp distributor with presence in 36 countries) looks interesting. The base consideration of $70m (comprising $60m cash + balance $10m retained towards satisfaction of any claims by the purchasers) translates to a transaction multiple of 2.45x P/B and 8x average FY10-12 EBITDA, and compares with the current market cap of $59m. Based on FY12 numbers, and including a potential additional adjustment amount of $4.5m, Oakwell’s NTA will rise from 4.42cts to 11.6cts. The group also stands to reap a disposal gain of $34.9m (5.21 cts per share). Oakwell will largely be a shell company on completion of the business unit sale, expected by 31 Oct 2013. Mgt intends to deploy the disposal proceeds to fund future acquisitions and working capital, consider reducing its bank borrowing and provide a dividend distribution.