SINGAPORE (Nov 4): DBS Vickers Securities and CIMB Research are advocating Super Group’s minority shareholders to sell at, or accept Jacobs Douwe Egberts’ (JDE) offer price of $1.30 – or risk ending up with shares in an unlisted private company.

While DBS has raised its target price to $1.30, CIMB reiterates its “hold” call on the stock with an unchanged target price of 82 cents.

To recap, the manufacturer and distributor of instant food and beverage products yesterday announced it received an offer from JDE, a Dutch tea and coffee company majority-owned by Acorn Holdings B.V.

Major shareholders of Super Group have undertaken to tender all their shares in acceptance of the offer, and this represents 60% of issued shares of the company.

(See also: Super Group gets $1.30 per share takeover offer from Jacobs Douwe Egberts)

Although the offer is currently pre-conditional and subject to clearance by anti-trust/monopoly regulators in various jurisdictions, both DBS and CIMB analysts do not think this will be a major obstacle to the JDE’s acquisition of the group, and view the conditional offer positively.

DBS analysts Alfie Yeo and Andy Sim say the event comes as a surprise to them, as the founding shareholders of Super Group did not show prior indications of selling out, and in fact were on the lookout for acquisition targets to leverage on the group’s balance sheet.

“However, the challenging operating environment together with the rich valuation offered of 30x PE may have been the driving factors for the current shareholders to exit,” say the analysts, while also observing the group’s recent “lacklustre” results as well as a challenging earnings outlook ahead.

Super Group is due to release its 3Q financial results on Nov 14, after reporting a 7% decline in earnings for the previous quarter.

(See also: Super Group posts 7% fall in 2Q earnings)

Yeo and Sim say the chances of a higher offer price are slim, adding that the irrevocable undertaking by the key shareholders does not allow them to terminate their obligation, even if there are competing offers at a higher offer price.

“[Super Group’s] stock price could move towards the offer price of $1.30 as these clearances are obtained. Long stop date for the pre-conditions to be satisfied is 3 May 2017,” they elaborate.

CIMB analyst Jonathan Seow, too, opines that JDE’s offer price is an attractive one which reflects both Super’s “strong presence in the region” and JDE’s “ambitions to become a true global player”, given the latter’s current lack of presence in Southeast Asia.

“We have a ‘hold rating’ premised on Super undergoing consecutive quarters of y-o-y profit declines as it is being hit by weak regional currencies and slowing demand,” he adds.

Shares of Super Group are trading at $1.26.