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Odfjell Jumps as Terminal Deal Boosts Profit Outlook: Oslo Mover

Odfjell SE, the world’s second-biggest operator of chemical tankers, climbed the most in more than a year in Oslo after an expansion of its tank terminals joint venture improved the company’s earnings outlook.

The Bergen, Norway-based company advanced as much as 14 percent, the most since Nov. 30, 2011, and traded 7.9 percent higher as of 1:40 p.m. in the Norwegian capital. That makes the stock the biggest gainer on the Oslo Stock Exchange’s All-Share index after Apptix ASA.

Odfjell agreed an expansion of its tank terminals venture, which operates storage tanks at container ports around the world, with Lindsay Goldberg LLC & Co., a New York-based private equity firm, the Norwegian company said in a statement today. The venture will now include all of Odfjell’s terminal operations, apart from two minority interests, while boosting its finances, it said.

The agreement “looks very positive,” SEB Enskilda ASA analyst Ole Stenhagen said by phone from Oslo. The terminals being added to the venture have been valued at the same multiple as those in the original venture, he said. “These are terminals in other, less prime and not as proven localities, where the trade patterns might not be as well known,” Stenhagen said.

Goldberg will pay $226 million in cash, valuing Odfjell’s terminal business outside of the existing joint venture at about 10 times estimated earnings before interest, taxes, depreciation and amortization for 2012, the company said.

Faster Growth

The deal will “significantly increase” the capitalization of Odfjell Terminals BV, the holding company that manages its terminals, and allow it to grow the business at a faster pace.

“Odfjell considers Lindsay Goldberg to be a strong and reliable long-term partner who can help fund its ambitious growth plans and build a large independent tank-terminals company with a global presence,” it said in the statement.

Odfjell, which earned about 10 percent of revenue last year from its tank terminals business, is considering a number of new projects, including one in Charleston, South Carolina, as well as the expansion of existing ones, such as in Houston, Texas, it said. It also sees “tremendous growth opportunities in China” and is examining opportunities in India, the Middle East, South America and Africa, Odfjell said.

“Until now they’ve managed to make terminals profitable,” said SEB’s Stenhagen. “If they can grow these to the same level of profitability as they say they believe they can, that’s great.”

-- Editors: Alastair Reed, Hilton Shone.

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