AscentPharma (APH) - A steal at 40c a share

Further to my earlier post regarding the Strides announcement just a few weeks back (Dec 1),  APH this morning  released details of the Strides scheme of implementation agreement.  Strides have increased their offer from the original 35c to 40c, valuing APH at $100m.  At the same time APH have indicated that their FY2010 NPAT is likely to be in the range of $11.5-$12m.

APH have appointed KPMG to provide the independent expert's report on whether the offer is in the best interests of shareholders.  While I'm happy with the increased offer, a price tag of $100m values APH on a P/E of 8-9 - extraordinarily cheap for a generics business exhibiting the sort of growth that APH has done over the past few years.   Strides itself trades at a P/E of 15.  

Were there any semblance of competitive tension in this process, APH should be selling for at least $120m+ but given Strides' dominant 60% stake it is unlikely that anyone will gatecrash this little party.  All the figures being quoted of premium to VWAP and last traded price are indicators of mis-pricing, not of true value.  APH at 40c a share is a bargain and Strides knows it.