Cobden Investments Ltd v The RWM Purchaser Ltd & Ors

Cobden Investments Ltd v The RWM Purchaser Ltd & Ors

The court determined that fair value required adjustments to EBITDA reflecting a 75% chance of successful renegotiation of the SBO recharge, inclusion of rent review and insurance without set-off, adoption of a 5x EBITDA multiple, inclusion of SCS debt as surplus asset, full working capital adjustment for late payments less £375,000 for CAPEX, compensation equivalent to interest at 2.5% per annum from 24 February 2009, and inclusion of bone-in cow trade profits in maintainable earnings at a 2.5x multiplier with appropriate deductions.

Parties
Petitioner: Cobden Investments Limited; Respondent: The RWM Purchaser Ltd; Respondent: Southern Counties Fresh Foods Limited; Respondent: Romford Wholesale Meats Limited
Jurisdiction
England and Wales
Judgment Date
17 December 2010
Procedural Posture
Company Petition / Supplemental Judgment on Valuation and Applications
Outcome
Supplemental judgment issued resolving valuation disputes and applications.
Legal Topics
Share Valuation, Unfair Prejudice, EBITDA Adjustment, Interest on Purchase Price, Bone in Cow Trade Compensation
Company Law Valuation Share Valuation Unfair Prejudice EBITDA Adjustment Interest on Purchase Price Bone in Cow Trade Compensation

Case Brief

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Parties

Cobden Investments Limited

Petitioner

The RWM Purchaser Ltd

Respondent

Southern Counties Fresh Foods Limited

Respondent

Romford Wholesale Meats Limited

Respondent

Procedural Posture

Company Petition / Supplemental Judgment on Valuation and Applications

Legal Issues

  1. 1 Appropriate adjustments to EBITDA for share valuation
  2. 2 Whether compensation equivalent to interest should be awarded on the outstanding purchase price
  3. 3 Treatment of bone-in cow trade profits in maintainable earnings

Ratio Decidendi

The court determined that fair value required adjustments to EBITDA reflecting a 75% chance of successful renegotiation of the SBO recharge, inclusion of rent review and insurance without set-off, adoption of a 5x EBITDA multiple, inclusion of SCS debt as surplus asset, full working capital adjustment for late payments less £375,000 for CAPEX, compensation equivalent to interest at 2.5% per annum from 24 February 2009, and inclusion of bone-in cow trade profits in maintainable earnings at a 2.5x multiplier with appropriate deductions.

Court Disposition

Supplemental judgment issued resolving valuation disputes and applications.

Orders

  • Adjust EBITDA by 75% of £259,000 for SBO recharge.
  • Include rent review and insurance without set-off.