Disposal8 Jun 2017 12:33
Didn’t expect Molins to pull off this disposal, but what did we expect when the shares have been undervalued for so long!
The last time I posted, I said the company needed to invest in their ageing assets. Now, they won’t need to invest as much. Instead, they will have a lot more cash at hand.
Before the disposal, Molin's enterprise value was £18m, now it is 25% higher!
Let’s say they invest £8m, that would leave them with £28m-£30m in the bank.
Regarding, their pension schemes, shouldn’t the deficit come down if interest rate or UK Gilts and US Bonds start to rise? Well, that depends on what’s in the composition of Molin's pension assets.
For those who haven’t read my March post, here is a reminder link: http://bit.ly/2mwmyrh
Oh, BTW, with this disposal, I expect the shares to trade around £1.20 per share or higher, giving a market value of £25m. Think about it, if their Tobacco division has similar fundamentals to their packaging division, shouldn’t that be worth at least £20m in a liquidation!
But, I need to do further research, before coming to a full conclusion.