The offering planned by Israeli crop protection provider Adama Holding Ltd. (TASE:ADMA.B1) (formerly Makhteshim-Agan), on Wall Street was cancelled on Thursday, because of low demand on the part of US investors at the offering price that the company sought ($16-18), even though Israeli investment institutions registered interest.
In a press conference, Adama CEO Chen Lichtenstein said, "We decided in the past few hours, because of conditions in the agri-chemicals market, that we should halt the offering planned for today. We decided that we were not prepared to issue shares outside the original price range that we sought, and we shall wait for more suitable market conditions. The company has huge potential, and because of the market conditions we'll wait for better conditions. We'll proceed with closure of the deal in China, and that is our message."
Adama's deputy chairman Ami Erel said, "Even a price of $16-18 seemed low to us, but we said that that would help in completing the merger with the Chinese companies. When it turned out that the market was weak, we decided that we would not sell at a lower price. Everything was done in cooperation with and with the consent of the management of ChemChina, IDB's partner in Adama. We have excellent relations with them, and there was no dispute between us. Adama will continue with the acquisition of the Chinese assets from ChemChina, through other means of financing that we shall find. There is full support for the decision, both from Eduardo Elsztain and Moti Ben-Moshe, who control IDB, and from the Chinese chairman of Adama."
Although Adama embarked on an offering, its controlling shareholder, ChemChina, has no interest in completing it at any price, and so it will be made only if the company obtains the valuation that its board of directors determines is appropriate.
Adama managers had conducted meetings with US investment institutions for over a week, with the aim of floating the company on the New York Stock Exchange (NYSE) under the ticker ADAM.
Adama planned to issue 23.5 million shares at a price of $16-18 per share, and thus raise $376-423 million, at a valuation of $2.6-2.9 billion after money. The underwriters were granted an option to purchase up to 3.525 million additional shares from the company, which would have increased the size of the issue by about $60 million, and the company's value accordingly.
On the Tel Aviv Stock Exchange, fast-moving speculators sent the share price of Discount Investment, a significant shareholder in Adama, down by about 9%.
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2014
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