RBS has just released a massive 15 page research paper covering the TXN/SEA merger and TXN/TALON demerger.
I'll work out how to share it but in the mean time here are some extracts (all the usual disclaimers apply = not my work, unedited by me, DYOR etc etc):
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We see upside from the merger with SEA and interest in Talon and recommend shareholders of Texon to vote in favour of all resolutions in the absence of a superior offer.
The deal adds value In our view the deal makes strategic sense. We value SEA on a post merger basis at $1.15 per share. On this basis, the current share price of TXN does not reflect any value for Talon, and therefore buying TXN now gives investors a free option in Talon, which we have valued at $0.10*/share. The share price of SEA is currently trading below our valuation post the merger ($1.15 per SEA share), suggesting significant upside in the next 12 months.
* This valuation is based on the current issued capital pre the proposed capital reduction. Following the 2 for 5 capital reduction this valuation would increase to $0.24 per share.
Implied TXN valuation $0.67 per share
TXN Price at posting:
50.0¢ Sentiment: Hold Disclosure: Held
