Elite shares dropping towards buyout offer price

Resource Assets Ltd, a St Lucia-registered company, has offered to buy all of Elite Diagnostic Ltd’s issued ordinary shares at $1.60 each or less than its trading price but roughly equivalent to its book value.

The stock fell 5.0 per cent on the Jamaica Stock Exchange on Tuesday to $1.70.

“The board has not yet formed a view on the merits of the offer,” stated Elite, which runs a medical imaging chain, in a notice to shareholders.

An independent committee of directors, the company’s legal adviser, and an independent financial adviser are reviewing the terms of the offer.

Resource Assets, whose registered office sits at 20 Micoud, Castries, delivered its offer circular to Elite’s directors on October 30. The bid covers every issued ordinary share and depends on regulatory approvals. Elite told shareholders to take no action until they receive and consider the directors’ circular and urged them to exercise “caution” in dealing in the shares.

The price tracks Elite’s net assets almost exactly. Audited accounts for the year to June 30 put shareholders’ equity at $570.6 million spread across 353.4 million ordinary shares, a book value of $1.61 each.

Junior Market companies now trade at their book value per share, according to a weekly trading report by Barita Investments, which tallies the market.

Last month, Elite wrote to every holder of 20 per cent or more, demanding confirmation of their holdings, their beneficial owners, the purpose of the purchases, and their intentions on control. It followed a review of shareholder records that had shown a single investor above 50 per cent between October 2 and 6, a holding that later retreated to about 38 per cent and prompted questions over whether the brief majority obliged the buyer to bid for the rest.

Elite earned $27.6 million in the year to June, down 14 per cent, on revenue of $867.3 million, up 2 per cent. Earnings per share came to $0.08. Total assets climbed to $1.3 billion from $1.1 billion.

business@gleanerjm.com