The proposed offer of €1.55 per share from Logicom to the shareholders of Demetra Holdings is neither fair nor reasonable, according to the report of an independent expert.

As a result, Demetra’s board of directors expressed its agreement and has subsequently adopted this opinion.

According to a report from Stockwatch, the board took into account several factors when considering the offer.

These include the content of the public offer document, the interests of the company’s shareholders, its overall interests, the objectives and intentions of Logicom, the financial data of Demetra, the potential impact of the offer on employees, and the independent expert’s report.

The independent expert stated that the calculation basis for the proposed offer was considered acceptable.

This is because the offeror has accounted for the most important factors, such as market value and liquidity.

However, the expert also noted that due to the lack of detailed financial forecasts, the use of discounted cash flow (DCF) methods was not feasible.

Furthermore, as there is no dividend distribution policy in place, the method of discounting dividends could not be applied.

The expert also highlighted that the market approach was not chosen by the offeror because there was insufficient information on transaction prices or comparable companies, considering Demetra’s specific characteristics.

Demetra is an investment holding company, which also operates as a portfolio and real estate investment firm, holding significant liquid assets and other investments.

What is more, the expert identified several aspects that should have been taken into account to determine a fair and reasonable offer.

Specifically, the proposed offer was below the average trading price of the company’s shares during the five months leading up to the announcement of the mandatory public offer.

Additionally, the expert pointed out that the company’s stock is generally liquid, especially when considering the overall market liquidity of the Cyprus Stock Exchange (CSE).

The proposed offer of €1.55 per share is a discount from the net asset value per share as of December 31, 2023, June 30, 2024, and September 30, 2024 (€1.84, €2.03, and €2.05, respectively).

The expert also noted that shareholders of Demetra had approved, at an extraordinary general meeting on January 9, 2025, the sale of Demetra’s stake in Hellenic Bank to Eurobank at a cash consideration of €4.843 per share, amounting to approximately €426.5 million.

Furthermore, the net asset value per share of Demetra is estimated to be around €2.50.

However, if a conservative approach is adopted, considering a maximum loss of €13 million for a property owned in Bucharest and guarantees for related companies, the net asset value per share would be calculated at levels higher than the proposed offer (€2.43 per share versus €1.55 per share).

The expert further noted that Logicom has no intention of restructuring Demetra, nor does it plan to change the current employment policy or the level of employment within the company.

It was emphasised that Logicom’s strategic plans for Demetra, as well as for its own operations, are focused on continuing both companies’ activities as they are, without any changes to their business scope, employment, or operational locations.

Moreover, based on the assumptions, reservations, and limitations described in the expert’s report, as well as the points outlined above, the expert concluded that the proposed offer of €1.55 per share to Demetra’s shareholders is neither fair nor reasonable.

Finally, it was also noted that one of Demetra’s board members, Varnavas Eirinarchos, declared a conflict of interest and, as a result, did not participate in the meeting where the board’s opinion was formed.

*This article is a translated version of content originally published on StockWatch.