The directors of Comvita, New Zealand’s number one seller of manuka honey, are urging shareholders to reject a takeover bid by Cerebos.
Cerebos New Zealand has offered $2.50 per share, which Comvita's directors say is well below the range of $3.40 to $4 a share valued by independent adviser Grant Samuel.
They have sent a document to shareholders unanimously recommending they reject the "unsolicited, unwelcome and opportunistic" offer.
The Cerebos offer will remain open until 5pm on December 22 and is conditional on receiving 90 percent acceptances and obtaining the consent of the Overseas Investment Office.
Brands under the Cerebos umbrella include Gregg's and Robert Harris.
Comvita chairman Neil Craig said the offer significantly undervalued the company, which was about to benefit from years of careful planning and development.
"The future is healthy," he wrote.
"Take no action and disregard the document sent to you by Cerebos."
According to the document, the directors believe Comvita's current growth strategies "built on product innovation, enhanced supply chain and control of our channels to market" are starting to deliver returns.
In the last five years, substantial progress has been made in the development of Comvita and the business is performing strongly. Management and staff across the Company are focussed and determined to deliver on many years of careful planning and investment in growth initiatives.
If you decide to sell your shares to Cerebos, you should wait until the last few days before the offer period closes on 22 December 2011. There is no advantage of accepting early as you will not be able to withdraw your acceptance and accept a better offer, should one emerge during the offer period.
This is not the time to sell your Comvita shares. None of the Directors are accepting the offer. If a buyer emerges that is willing to fully recognise the potential of Comvita we will assess such an offer and report to you.
In a briefing this afternoon, Comvita's management acknowledged the company's variable earnings in recent years.
"At the same time, we have made acquisitions, significantly evolved our business model and increased the size of our business by 2.4 times. In the last few years substantial progress has been made in the development of Comvita – sales are projected to be $91m-$95m in the current year to 31 March 2012 versus $39m in the year ended 31 December 2006."
It is forecasting earnings per share to be 24.7 cents to 27.8 cents in the year ending March 2012.