Halcyon Agri

Halcyon Agri: ($0.895) Proposed deal spearheads Halcyon to become top five global rubber producer Wholly-owned subsidiary, Halcyon Rubber Company (HRC), confirmed their proposed deal with Lee Rubber group to acquire Anson Company- which owns and operates nine crumb rubber factories across Indonesia, producing standard Indonesian rubber for global leading tyre makers. The $450m deal is value-accretive for Halcyon, which translates to an implied 15.5x FY13 earnings and 2.3x book. Subjected to shareholders' approval, the deal will raise the combined entity's annual export capacity for crumb rubber and natural rubber to 385k (+250%) metric tonnes and 740k tonnes (+120%) respectively, making the company one of the top five global rubber producer. Apart from utilizing internal resources and debt, Halcyon entered a 59.5/40.5 JV with Angsana Capital- owned by chairman and CEO- Robert Meyer, whereby Halcyon will acquire 110m shares and Angsana will buy 75m preference shares (5%/annum) in HRC at $1.00 apiece, raising an additional $75m to fund the acquisition. Post deal completion and JV- assuming Halcyon funds the HRC share acquisition in cash, proforma FY13 EPS will increase 31% to 3.76¢ and NAV to 32.89¢ (+28%), while group will turn from net cash position to net gearing of 280.4%. At the current $0.895, Halcyon is valued at proforma FY13 earnings of 23.8x and 2.7x P/B.