Cermaq ASA (CEQ), a Norwegian fish-food maker, jumped the most on record in Oslo after Marine Harvest ASA (MHG), the world’s biggest salmon farmer, made a 105 kroner a share ($18.18) offer to expand into feed and grow its farms.
Cermaq climbed as much as 24 percent, the most since first trading shares in Oslo on Oct. 24, 2005, and traded 22 percent higher at 105 kroner as of 11:50 a.m. Marine Harvest gained as much as 7.8 percent before trading up 3.8 percent at 6.23 kroner, the highest intraday level since May 9, 2011.
Marine Harvest offered 104 kroner a share for Cermaq, excluding a planned 1 kroner dividend, it said on April 30. The offer, which is conditional on Cermaq not going through with a proposed 3.49 billion kroner takeover of Copeinca ASA (COP), is “inadequate” and undervalues the company, Cermaq said today.
While the deal makes sense from “both an economic and strategic point of view,” the offer price “looks meagre,” ABN Amro Bank NV analyst Maarten Bakker said in an e-mailed note to clients. If successful, the acquisition would create a “giant in the salmon chain with clear number one positions” in feed, farming and processing.
Marine Harvest, controlled by Norwegian billionaire John Fredriksen, is seeking to buy Cermaq to expand into fish feed production as raw material prices boost costs. The company would also be able to expand its fish farming operations in Norway as the government eases restrictions on ownership of salmon production capacity.
“No other industrial combination than Cermaq and Marine Harvest is better suited to lift both the companies and the Norwegian marine industry into a position of global leadership,” Marine Harvest Chairman Ole-Eirik Leroey said on April 30. “We will maintain all significant parts of the companies in a strong, world class company; offering an integrated value chain from feed to retail sales.”
The offer, which values Cermaq at about $1.7 billion, needs two-thirds acceptances and will be paid half in shares and half in cash, Oslo-based Marine Harvest said. While it hasn’t considered in detail the potential gains from a combination, it said it expects the “synergy potential to be significant.”
Cermaq, in which the Norwegian government owns a 43.5 percent stake, controls more than 50 percent of the shares of Copeinca, a producer of fishmeal and oil from anchovy caught off the coast of Peru, and will make a voluntary offer for the rest, it said last month.
The company will continue with the offer as planned and “will review all of its options, including alternative financing, to secure completion of the transaction,” Cermaq said today. Copeinca, based in Lima, is the world’s largest exporter of the salmon feed ingredients by volume.
Norway’s Industry Ministry has taken note of Marine Harvest’s offer and will take it under consideration, it said in a statement on April 30. Ministry spokesman Trond Viken declined to comment further when contacted by phone today.
If the bid for Cermaq is successful at the current offer price, “we see a value creation potential of around 2 billion kroner,” SEB AB said in an e-mail. “It will largely be up to the Norwegian government to decide whether to follow through on the Copeinca transaction, accept Marine Harvest’s conditional offer or seek a different alternative.”
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