Marine Harvest May Hike $1.7 Billion Cermaq Bid, Brokers Say

Marine Harvest ASA, the biggest salmon farmer, may boost its $1.7 billion offer for Cermaq ASA, the largest publicly traded fish-feed maker, according to analysts including SpareBank 1 Markets and ABN Amro Bank NV.

The 105 krone-a-share ($18.13) offer “is not high enough to make us certain” of acceptance from Norway’s government, Cermaq’s largest shareholder with a 43.5 percent stake, SpareBank 1 analyst Geir Kristiansen said in a note to clients today. “The bid is lower than fair value for Cermaq as-is” and could be increased by as much as 10 kroner a share, he wrote.

The bid by Oslo-based Marine Harvest needs the acceptance of two-thirds of Cermaq’s shareholders, according to an April 30 statement. It also needs Cermaq to abandon its plan to buy Peruvian fishmeal- and oil-maker Copeinca ASA in a 3.5 billion kroner deal.

Marine Harvest’s offer is “inadequate” and Cermaq will proceed with its purchase of Copeinca, it said yesterday.

Cermaq shares rose as much as 3.9 percent to 108 kroner earlier today after Marine Harvest Chairman Ole-Eirik Leroey said “reason will prevail” in his company’s efforts to buy the fish-feed maker. The stock closed up 3.4 percent at 107.5 kroner in Oslo, above Marine Harvest’s 105 kroner offer price, which includes a planned 1 krone-per-share dividend.

Sweetened Offer

Cermaq’s takeover of Copeinca would boost the group’s fair value to 121 kroner per share from 112 kroner, while synergies between Cermaq and Marine Harvest could amount to 23 kroner per Cermaq share, Kristiansen wrote. Cermaq’s current share price also “ gives room” for a higher offer, he said. Sparebank 1 Markets has buy ratings on both Marine Harvest and Cermaq.

“We see room for Marine Harvest to sweeten the offer in order to convince Cermaq shareholders,” ABN Amro Bank analyst Maarten Bakker said in a note dated May 2.

“We are already trading above the 104 kroner, which to me is an indication the market believes there will be a higher offer,” Cermaq Chief Executive Officer Jon Hindar said by phone from Oslo. “I believe the market would be right in that.”

The success of Marine Harvest’s offer will hinge on the Norwegian government’s decision whether to back Cermaq’s plan to issue shares to fund its acquisition of Copeinca, Carnegie AB analyst Marius Gaard said in a note yesterday. Cermaq is scheduled to hold its annual general meeting in Oslo on May 21.

“We will consider the Marine Harvest offer as a responsible and good owner,” Trade and Industry Minister Trond Giske said in an interview in Oslo today. “We will respond when we respond.” He declined to comment further.