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Entropy warns institutional investors of Nestle undervaluing Osem


03/09/2016

Entropy, an Israeli consultancy firm has warned institutional investors that Nestle in its bid to buyout minority shareholders in Osem, Israel’s 3rd largest food manufacturer, has significantly undervalued the company.



An Israeli consultancy firm has advised institutional investors in Israel to oppose Nestle’s bid in acquiring Israel’s third biggest food manufacturer Osem.
 
Last month, Nestle had offered 3.3 billion shekels, equivalent to ($845 million), for buying out minority shareholders in Osem. It has offered 82.5 shekels per share and has valued the company at 9.13 billion shekels.
 
In a report, ahead of the shareholder’s vote scheduled to take place on March 17, Entropy has advised its clienteles which include prominent institutional investors to oppose Nestle’s move on the grounds that Osem has been valued at too low a value and furthermore the amount it is offering for the acquisition is in comparison to its other purchases in recent years is again low.
 
As per the Entropy report, Nestle’s acquisition values Osem at an enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA) of 13..4% against Nestle’s average buyout for the last 8 big deals in the past 15 years is 15.6%.