Cermaq ASA : Cermaq ASA : Cermaq recommends against the voluntary offer from
Urges shareholders to await potential alternative solutions
The Board of Directors of Cermaq has in accordance with the Norwegian
Securities Trading Act § 6-16 considered the offer document from Marine
Harvest. The Board has unanimously decided upon a recommendation to the
company's shareholders not to accept the offer, which today has a value of
approximately NOK 105 per share. The Board maintains its previous statements
that neither the underlying value of Cermaq nor the synergies that could have
been realized through a combination are reflected in this offer. It is further
considered most unfortunate that the acceptance level again is set at 33.4%.
The Board and management of Cermaq have made good progress in relation to the
alternative processes that are ongoing to demonstrate the value of the company
and expect to present this before the shareholders need to decide upon the
current offer from Marine Harvest.
This statement is provided by the Board of Directors of Cermaq ASA («Cermaq»)
in accordance with the Norwegian Securities Trading Act of 2007 § 6-16, in
connection with the voluntary offer from Marine Harvest ASA («Marine Harvest»)
to acquire all outstanding shares in Cermaq as described in the offer document
dated 5 June 2013.
Please refer to the offer document published by Marine Harvest for a full
description of the offer.
Cermaq considers alternative strategic solutions
Cermaq supports a continued consolidation of the farming industry in selected
geographical areas and considers that a combination of Marine Harvest and
Cermaq could be value creating for the company's shareholders provided an
optimal integration and a fair valuation of the company's shares. The current
offer does not meet those requirements.
The Board of Directors in Cermaq has previously communicated its commitment to
consider other value creating transactions as alternatives to the offer from
Marine Harvest to demonstrate the values of the company. Cermaq has made good
progress in alternative processes and has an extensive dialogue with parties
interested in different parts of the company's assets, such dialogue also
including a full sale of EWOS. The Board's clear objective is to present the
result of these discussions prior to the date shareholders must decide upon
the current offer from Marine Harvest.
The Board of Cermaq therefore strongly encourages the company's shareholders
to refrain from a final evaluation of the offer from Marine Harvest until such
clarification of alternative transactions is presented. The company's efforts
in providing alternative solutions may be compromised to the extent
shareholders decide to provide pre acceptances to Marine Harvest.
The offer does not reflect the underlying values in the company or the synergy
potential in the transaction
The offer from Marine Harvest represents 8.6 shares in Marine Harvest in
addition to NOK 53.25 per share in Cermaq in cash. At the time of the launch,
the value of the offer was estimated to NOK 107 per share. The value of the
offer has since been reduced and is today approximately NOK 105 per share,
being broadly the same level as the potential offer that Marine Harvest
presented in its press release 30. April 2013.
The Board considers this offer to be significantly below the underlying value
of Cermaq's operations and market positions. In its evaluation, the Board has
amongst others considered the pricing of companies that are comparable to
Cermaq's various operations as well as acquisitions and other transactions
within the aquaculture industry.
The Board believes that a combination of the two companies could create
significant synergies. The potential value creation will, however, as per the
current offer from Marine Harvest, not in a sufficient manner benefit Cermaq's
shareholders. This evaluation is both due to the price level of the offer as
well as the fact that only approximately half of the consideration will be
made in shares in the combined company.
Based on statements from Cermaq's largest shareholder, it is considered
unlikely that Marine Harvest will achieve full ownership control in Cermaq. In
such a situation it will not be possible to realize the full synergies and
value creation potential of a combination. The part of the consideration
provided in shares in Marine Harvest will therefore have a lower value for
Cermaq has through extensive contact also with the company's private
shareholders received clear feedback that the current offer is not considered
as satisfactory. This feedback provides additional support for the Board's
The Board's conclusion with respect to the value of the offer is also
supported by ABG Sundal Collier Norge ASA («ABGSC»), who is engaged as
Cermaq's financial advisor in relation to the offer. ABGSC on 10 June 2013
provided its assessment with the conclusion that the offer is inadequate from
a financial point of view. ABGSC's fairness opinion is enclosed with this
On 31 May, Cermaq also retained Deutsche Bank as financial advisor in addition
The offer includes a very limited take-over premium and is presented at a most
favorable time for Marine Harvest
Based on the closing share price of Marine Harvest at Friday 7 June 2013, the
offer includes a bid premium (dividend adjusted) of only approximately 17%
compared to Cermaq's share price at 4 April 2013, the day before the Copeinca
transaction was announced, and only approximately 6% compared to Marine
Harvest's own indication of what the share price of Cermaq would have been at
30 April 2013 if the Copeinca transaction had not been announced. This is
significantly below the premium levels normally observed in take-over
situations. The Board does not consider the calculations of acquisition
premiums presented by Marine Harvest in the offer document as representative
for the realities.
The Board would also like to comment that the share price ratio between Cermaq
and Marine Harvest at the time of Marine Harvest's first announcement of a
potential offer (30 April 2013) had not been at a lower level (and hence at a
more beneficial level for Marine Harvest) since April 2011.
High probability for delayed payment
The offer document does not state at what time settlement of the offer can be
expected to be made. The stock exchange notification dated 6 June informs,
however, that settlement is expected in July 2013. Should necessary
competition approvals be delayed, Marine Harvest may, in accordance with the
offer document, be able to wait until 30 December 2013 prior to making a final
decision whether to complete the transaction.
The Board has obtained an external legal evaluation of the above matters in
which it is considered less likely that Marine Harvest will be able to comply
with its intention for payment of the proceeds in July, as stated in the stock
exchange notification dated 6 June.
Shareholders that choose to accept the offer may therefore risk a
significantly later payment than indicated.
Marine Harvest holding negative control may adversely impact Cermaq and its
The Board considers it most unfortunate that the acceptance level again is set
at 33.4%. Through a controlling minority position, Marine Harvest may
negatively influence Cermaq's future strategic flexibility and block value
creating strategic solutions, including, but not limited to, mergers,
demergers, share issues and capital decreases, and at the same time such
acceptance level contribute to create a very uncertain situation for the
company and its employees. This may reduce values for other shareholders.
The Board also is concerned to have as shareholder with negative control one
if its major competitors, as the objectives for such an owner may be contrary
to the company's and the other shareholders' interests.
Consequences for the company's business
There has been no contact between Marine Harvest and the Board or Management
of Cermaq to discuss a possible integration between the two companies and a
further organization of the combined businesses. Cermaq's evaluation of
possible consequences of the offer is therefore based on the relatively
limited information provided by Marine Harvest in the offer document.
Briefly summarized, Marine Harvest does not seem to plan the closing of any of
Cermaq's facilities, but it is also stated that changes in the Cermaq
organization («with legal, financial or employment related consequences»)
cannot be ruled out. The Board of Cermaq will, however, emphasize that the
offer document from Marine Harvest underlines that the company has not made
any detailed evaluations of the economies of scale or other synergies that can
be realized through a business combination. A potential comprehensive analysis
from Marine Harvest with respect to the completion of such integration may
therefore include more significant consequences for Cermaq's businesses than
as presented in the offer document.
Based on the above, the Board of Directors unanimously recommends that the
shareholders in Cermaq reject the offer from Marine Harvest.
Chairman of the Board of Directors Bård Mikkelsen owns 3.000 shares in Cermaq
while the board members Rebekka Glasser Herlofsen, Åse Aulie Michelet and Jan
Helge Førde own 5.000, 4.000 and 227 shares in Cermaq respectively. CEO Jon
Hindar owns 3.200 shares in Cermaq. Neither Cermaq's CEO nor the above
mentioned board members will accept the offer from Marine Harvest for their
For further information please contact:
CEO Jon Hindar ph. +47 23 68 50 10 mobile: +47 977 48 829
CFO Tore Valderhaug ph. +47 23 68 50 38 mobile: +47 995 60 925
About Cermaq - Cermaq is an international group of companies with activities
in fish farming, production of salmonid feed and research in aquaculture.
Cermaq has operations in Norway, Chile, Canada, Scotland, the main geographic
regions for salmon and trout farming, and in Vietnam. Through its business
unit EWOS, Cermaq ranks as the world's largest producer of feed for salmonids.
The business unit Mainstream is one of the world's leading farming companies
of salmon and trout. The group had sales of around NOK 11.8 billion in 2012.
Cermaq is listed on the Oslo stock exchange with ticker code CEQ.
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
ABGSC fairness opinion
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applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.
Source: Cermaq ASA via Thomson Reuters ONE
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