EnWave Acquisition Of Binder Closes

The acquisition of Hans Binder brings EnWave’s (ENW.V) innovation, global marketing expertise, Tier 1 collaboration pipeline and growing patent position together with Binder's scale, experience and ability to design and deliver industrial scale turn-key vacuum microwave plants, customised for specific applications. These qualities open the gap between EnWave and its competitors and strengthens the equity story.


Acquisition of Hans Binder closes
EnWave is investing 625k share options and €2m into Hans Binder in exchange for 86.5% of the company. The combined strengths of the two businesses should offer customers exceptional machine quality and overall service with stronger protection of general know-how and intellectual property on a global basis.

Customer collaborations continue to progress
EnWave continues to sign up new customers for R&D and pilot plant projects. It has announced a collaboration with a second tier 1 company to test a new product on the market. This follows the announcement of another collaboration with a second pharmaceutical company and a collaboration with Sun Maid. The pipeline of potential royalty licences gets wider, reducing the risk to investors.

Slight delays require adjustments to forecasts
We had assumed that the closure of the Hans Binder deal would take place in the fourth quarter of the year ending September 2012. Since this slips into Q1 2013 we have reduced our forecasts for 2012 and increased 2013 revenues. The first royalties from Milne Fruits may be later and hence contribute less than expected in Q4 2012.

Valuation: Early stage, so wide range
Modelling the revenues that can be generated for each potential market segment EnWave’s Radiant Energy Vacuum (REV) technology can address, we conclude that EnWave’s fair value could fall within a wide range of C$2 and C$11 per share. Our analysis suggests the share price factors in very little success. With the delay in acquisition closing, the range of possible values in our sensitivity table moves down slightly. However, the continuing announcements of new agreements further derisk the investment, justifying a higher value in the range.

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