Sending its share price to an all time high, the control of J.L. Morison and Son and Jones (Ceylon) Plc is speculated to be up for grabs with market talk of several parties keenly bidding or evaluating.
The Abeyawira family and connected parties own over 70% stake in the highly respected Group which has long standing interests in consumer products, pharmaceuticals and agro chemicals. The Group also has some good real estate.
Capital market sources said that a possible sell out by Abeyawira family has been doing the rounds with at least a few brokers soliciting interest from prospective interested parties. Others said the family wasn’t on the lookout for a buyer and it was those who are keen that have been expressing interests.
Market talk is among possible contenders are several blue chips with existing exposure in related businesses as well as upcoming conglomerates.
However none of these speculated parties could be reached for confirmation whilst J.L. Morison hasn’t made any disclosure either with the latter being attributed to the fact that no deal has been finalised.
Market talk also stems hot on the heels of consumer goods heavy diversified non-listed entity Delmege Forsyth Group acquired by business leader Dhammika Perera-controlled Vallibel One Ltd and a related consortium for Rs. 3 billion a fortnight ago.
Analysts linked J.L. Morison share price hitting an all time high last week to speculation of a possible impending deal. Morison’s voting share peaked to Rs. 4,500 beating its previous best of Rs. 3,595 whilst non-voting reached Rs. 3,400 surpassing the former all time high of Rs. 2,750. The voting share closed at Rs. 4,037.30, up by Rs. 547.30 and non-voting finished the week at Rs. 3,187.90 up by Rs. 885.90. In the previous week the two classes of shares rose by Rs. 95.50 and Rs. 2 respectively whilst a week before the former rose by Rs. 94.50 and the latter dipped by Rs. 150.
Brokers said that the majority owners were looking at a price of Rs. 5,000 per share whilst the Group’s net asset value is Rs. 2,300 as at 31 March, 2011 and earnings per share was Rs. 438.50 up from Rs. 1,385 and Rs. 131.82 in the previous year.
Morison’s voting shares in issue is only 580,829 and non-voting amounts to 174,249. Last week 9,500 voting shares traded apart from 11,100 non-voting shares. Volumes were unusually high last week whilst independent director A.S. Abeyewardene made a disclosure that he bought 200 non voting shares at Rs. 2,300 per share on 21 June.
The Company paid a Rs. 20 per share interim dividend in December last year for FY 2011.
J.L. Morison in FY2011 reported a Group revenue of Rs. 12.73 billion, up by 1.4% whilst profit from operations rose by 63% to Rs. 265 million. With profit of Rs. 164 million from the sale of 24% stake in Colombo Pharmacy late last year, pre-tax profit rose to Rs. 429 million from Rs. 160.4 million in FY2010. Net profit grew by 233% to Rs. 331 million in FY 2011 as per provisional results.
Consumer products produced the highest turnover of Rs. 1.3 billion followed by pharmaceuticals (Rs. 834 million) and agro chemicals (Rs. 189 million) in FY 2011. Though top lines were lower in comparison to FY2010, the operating profit from these segments were better in FY2011 with pharmaceuticals producing Rs. 180.4 million (up from Rs. 114 million), consumer producing Rs. 61.4 million (up from Rs. 50.5 million) and agro chemicals Rs. 25 million (up from Rs. 15 million).
Total Group assets were worth Rs. 2.54 billion, up from Rs. 1.9 billion whilst that of the company amounted to Rs. 1.5 billion, higher from Rs. 1.2 billion as at 31 March, 2010. Group current liabilities amounted to Rs. 671 million (trade and other payables Rs. 442 million and 182 million in borrowings), down from Rs. 755 million a year earlier.