Serendib Land offer has drawn strong opposition from independent advisors, who warn shareholders that the mandatory bid significantly undervalues the company, highlighting a growing mismatch between regulatory pricing formulas and underlying asset-based valuations.
Serendib Land offer faces resistance as valuation gap widens
Independent advisors have urged shareholders of Serendib Land PLC to reject the mandatory offer made by Senthilverl Holdings (Private) Limited, warning that the bid materially undervalues the company and reflects a broader trend of technically compliant yet economically unattractive takeover offers in the Sri Lankan equity market.
HNB Investment Bank, acting as the Independent Advisor, concluded that the offer price of Rs. 1,500 per share fails to reflect the intrinsic value of Serendib Land, particularly given the strength of its asset base and improving market sentiment toward real estate-linked counters. While the offer meets the minimum requirements of the Takeovers and Mergers Code, the advisors cautioned that regulatory compliance should not be conflated with fair value for minority shareholders.
The mandatory offer was triggered on November 14, 2025, after high-net-worth investor Dr. T. Senthilverl increased his stake in Serendib Land through his investment vehicle, Senthilverl Holdings. The acquisition of an additional 12.81 percent lifted his total holding to 38.27 percent, crossing the threshold that obligates an offer to remaining shareholders. Although the Rs. 1,500 price reflects the highest amount paid by the acquirer in the preceding twelve months, advisors argue that this backward-looking formula ignores the company’s evolving fundamentals and asset potential.
According to HNB Investment Bank’s independent evaluation dated January 1, 2026, the Serendib Land offer implies a discount of nearly 16 percent to the company’s Net Asset Value per share of Rs. 1,785.23 as at September 30, 2025. This valuation gap, the advisors noted, is unusually wide for an asset-rich real estate company with prime land holdings and limited balance sheet stress.
The undervaluation becomes more pronounced when market-based benchmarks are applied. A Price-to-Book Value approach places the fair value of the share at approximately Rs. 1,774.80, still leaving the mandatory offer trailing by over 15 percent. Accepting the bid under these circumstances would effectively require shareholders to exit below the replacement value of the company’s assets, crystallising a loss despite a supportive property market outlook.
Secondary market pricing further undermines the attractiveness of the offer. The advisor highlighted that the Rs. 1,500 bid stands at a discount of about 6.9 percent to the volume-weighted average prices recorded over the three-, six-, and twelve-month periods. More tellingly, the share last traded at Rs. 1,899 on December 19, 2025, representing a premium of nearly Rs. 400 over the offer price. This divergence suggests that market participants have already priced in stronger earnings potential or future asset revaluation.
HNB Investment Bank emphasised that minority shareholders operating in a high-inflation environment should be particularly cautious about accepting bids that do not compensate for both asset backing and opportunity cost. The firm noted that Serendib Land appears positioned for a possible re-rating as investor appetite for real estate-linked equities improves alongside macroeconomic stabilisation.
The Serendib Land offer also reflects a broader pattern emerging in the market, where mandatory offers meet technical thresholds but fail to attract meaningful shareholder acceptance. These bids, often calculated using historical transaction prices, increasingly lag behind current market valuations and forward-looking fundamentals, reducing their effectiveness as genuine exit opportunities.
A recent example cited by market observers is the mandatory offer for Harischandra Mills PLC, triggered by Hayleys PLC at Rs. 3,300 per share. That offer, which closed on December 30, 2025, garnered negligible interest, with valid acceptances amounting to just 0.06 percent of the public float. The market price had consistently traded above the offer level, reinforcing shareholder reluctance to tender at what was perceived as a floor price.
A similar situation has unfolded at Myland Developments PLC, where Ambeon Capital PLC’s mandatory offer at Rs. 8.50 faced resistance following an independent advisory opinion highlighting fundamental undervaluation. HNB Investment Bank, acting in the same advisory capacity, urged shareholders to reject that bid as well, citing a disconnect between the offer price and the company’s asset and earnings potential.
Taken together, these cases suggest that minority shareholders are becoming increasingly discerning, prioritising intrinsic value over regulatory minimums. For Serendib Land investors, advisors conclude that rejecting the current offer preserves exposure to a company whose underlying value appears mispriced by a technically compliant but economically insufficient bid.