Alex Waislitz is running a fine-toothed comb over the independent valuation OneVue board cited in endorsing Iress's 43 cents per share bid to acquire the company.
His Thorney companies have 18.35% interest in OVH, have already voted against accepting the offer, and are asking other shareholders to vote it down too, as first flagged by Financial Standard on Tuesday.
OneVue has maintained an independent expert put the valuation per share at 36 cents to 43 cents - and both of Iress's offers have been towards the higher end of it.
"Contrary to its public statements, Iress's final offer of 43 cents per share is NOT at the top of all of the independent expert's valuation ranges. One of the independent expert's valuation methodologies - the discounted cash flow valuation - has a range of 38-46 cents per share. Iress's final price of 43 cents per share is below the top end of this range which Thorney regards as still being too low," Waislitz said in a letter sent to OVH shareholders yesterday.
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Waislitz went out to list other omissions in the expert's valuation, including: OneVue's FY20 results with record numbers for funds administration business, its recently-expanded partnership with Australian Unity, analyst consensus for the company's FY21 earnings, and valuations of similar businesses.
He said the expert undervalued OneVue's platform business, and by extension the company.
"..we consider the appropriate valuation methodology would be to assess each of the business units (platform and funds administration) separately - especially given the strong valuations currently being afforded to platform businesses by the share market. The independent expert did not consider a sum-of-the-parts approach in assessing the value of OneVue. In Thorney's opinion, this does not factor in the full value of the company."
"The independent expert has used an EV/EBITDA earnings multiple of 13.7 times for the entire OneVue business. What is ignored in this assumption is that many ASX-listed platform businesses are valued on an EV/EBITDA multiple of more than 20 times. The implication is that OneVue's Platform business is not fairly or fully reflected in the valuation derived by the independent expert.
"In fact, on page 54 of their report, the independent expert identifies HUB24 Limited as a "close comparable" to OneVue, and yet fails to apply anywhere near HUB's multiple in determining a value for OneVue's Platform business."
Amid his other concerns were OneVue's $2.5 million in retained franking credits which will be lost to existing investors.
And the all-cash bid, which corners them out of potential revenue and cost saving synergies.
"In Thorney's view, OneVue shareholders will be better off in the medium term by also voting against the proposed scheme and keeping OneVue as an independent entity," he wrote.
The shareholder vote is scheduled for October 9, and blocking it would require 25% of the total votes. Thorney is the biggest shareholder with 18.35% interest.