That's great news - well done to the board. $13m seems a fair price - certainly it's a substantial improvement on Global Foods' $8.3m offer. And it sounds as though the ginger and tourism businesses are going to a good home.
Is a substantial re-rating of BUG now warranted?
At today's close of 23c, BUG had a market capitalisation of $19.8m.
With the sale of the ginger and tourism divisions netting $13m, what's left of BUG - the macadamia business - has an implied market capitalisation of just $6.8m.
That seems cheap considering the macadamia business had sales of over $40m last year. That was substantially more than the sales of the ginger and tourism divisions combined ($24m + $6m).
I expect the new BUG will be sitting on considerable net tangible assets too (including a lot in macadamia inventories).
So I'm guessing a substantial re-rating is probably warranted. But I could be completely wrong. BUG's debt complicates the situation.
Ann: Sale of Ginger Division to Queenland's Himstedt Family, page-5
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