.38+ likely now due to COMPETING offers received according to Pwc (Thank you GS1)
The heavier volume today also indicated that someone got some information similar to how the first rally started on June 7th hours ahead of the motion agreeing on the DIP to pursue a buyer.
Official PR might be announced after Monday's Canadian holiday
but this stock will explode on Monday trying to gap the possible 700% upside just days ahead from the residual equity from the bidding war buyout. Seems like there is strong interest for this fairly new and the largest succinct acid plant in the world.
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Obviously if there is a bidding war among several interested buyers, the sale price can increase.
So who do you think are the potential buyers that submitted the letters of intent?
To give us a hint of who could the be the most probable, compare Nextant and Pwc lists of potential buyers they researched and look for the ones that coincide on both.
Potential buyers according to Nextant: BASF, DSM, Cargill, Lygos, Genomatica, Myriant, PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, Evolva
Potential buyers according to Pwc: DOW, Reverdia, BASF, Myriant, PTT, Sumitomo, Mitsui, Mitsubishi Chemical, Exxon Mobil, Sinopec Chemical
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
A JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
Read more on document bioamber-009_060718.pdf
