Alpine Shareholders deserve a FAIR DEAL

Hitachi’s sale of Clarion proves what the fair price is for Alpine.

It is at least 2.5x what Alps want to pay you.

Do Not Vote for the Merger!

As at October 30, Alps is trying to buy your stake in Alpine at LESS than JPY1,700! That is less than Alpine’s stock price before the deal was announced and before it revised up its earnings three times!

Alpine continues to beat its earnings forecasts and yet is trying to force minorities to accept a lower and lower offer from Alps

Alps and Alpine’s management are working together against Alpine’s minority shareholders

Don’t let them get away with it

The Clarion deal proves that your stake in Alpine is worth at least 2.5x what Alps wants to pay you

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On Oct. 26, Faurecia announced it will tender for 100% of Clarion at a valuation of 11.2x EV/EBITDA. That implies a price of JPY4,731 per share for Alpine, more than 2.5x the amount Alps is offering. The Clarion deal is a real-world example and true reflection of the fair value that should be applied to Alpine.

The Clarion deal is a watershed moment in this long saga. It proves what a true third-party buyer is willing to pay for Alpine in this period of transformation and the growing importance of infotainment hardware and software.

  • The valuations used in the Clarion transaction are a better indication than stock market prices, which only indicate what minority, small and non-controlling stakes are transacted at

  • They are better than discounted cash flow analyses, which are highly sensitive to theoretical assumptions and figures (let alone ones which include highly questionable figures and assumptions!)

 

Implication of the Clarion deal

The Alps offer is well below every single one of the Clarion-deal implied multiples. This shows just how low the offer for Alpine is:

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If Alpine insists on a merger with Alps, then we must demand a higher price for minority shareholders.

Based on the Clarion deal, Alpine’s shares are worth between JPY4,731 and JPY12,061 per share:

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There are alternatives to a merger with Alps

If Alps refuses to change the price, Alpine should cancel the merger. Alps is not the only option out there, and Alpine must not be held to ransom when it has so many other excellent opportunities at hand.

Alps’ current offer values Alpine as a bankrupt company with no future. This could not be further from the truth!

Alps’ offer is so low that there is no downside or risk to rejecting the merger. In fact, we believe that Alpine’s stock price will increase if the deal is rejected.

The acquisition of Clarion should prompt Alpine’s management to look at alternative partners who will add more value than Alps. Partners such as Faurecia, one of the largest Tier 1 auto suppliers, would help expand Alpine’s reach.

We call on Alpine’s management to postpone the EGM and work with minority shareholders to pursue alternative partners to Alps that would offer more attractive growth opportunities for Alpine and a higher valuation for minority shareholders.

If Alps truly values Alpine at such a discount to its fair value, then it should be more than willing to “go shop” Alpine to alternative buyers and generate far more cash for themselves – a win-win for everyone.

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