Cermaq Gets $1.1 Billion Bid From Bain, Altor for Feed UnitStephen Treloar
Cermaq ASA, the Norwegian fish-food maker that’s a takeover target for Marine Harvest ASA, received a 6.2 billion-krone ($1.1 billion) offer for its Ewos division from Bain Capital LLC and Altor Equity Partners.
The bid implies an enterprise value that’s 10 times the “market consensus” earnings before interest and tax for the fish-feed and nutrition unit in 2013, the Oslo-based company said today in a statement. The bid is “sufficiently interesting for Cermaq to initiate a process with the aim to conclude a final agreement,” it said.
Cermaq, in which the Norwegian government has a 43.5 percent stake, earlier this month rejected the offer from Marine Harvest and said it would hold talks with investors about the sale of assets. Marine Harvest, the world’s biggest salmon farmer, on May 31 offered 107 kroner a share in stocks and cash for the company.
The Bain and Altor offer is subject to the completion of debt financing, for which the private equity investors have written confirmation of interest from Nordic and international banks, the company said. The sale will free up funds to cut debt and to pay an extraordinary dividend of 4 billion kroner to 5 billion kroner, or 43 kroner to 54 kroner a share, Cermaq said.
Shares in Cermaq rose as much as 3.7 percent to 113 kroner, the biggest gain in almost a month, and were at 112.5 kroner as of the 4:30 p.m. close in Oslo. That gives Cermaq a market value of 10.4 billion kroner.
Cermaq’s board said it will hold an extraordinary meeting to decide on the transaction, which will need the backing of at least 50 percent of the shareholders.
“A sale of Ewos at the above mentioned terms will be an important step to realize the values in Cermaq,” the company said. Once the potential agreement is completed, the company plans to further develop its farming operations in Norway, Canada and Chile, it said.
The price being offered by Bain and Altor for Ewos is “significantly higher” than Pareto Securities AS’s enterprise value, analyst Henning Lund said in a note to clients. The broker had a value of 4.7 billion kroner on the unit and had expected weaker margins to result in lower multiples than its peers, such as Nutreco NV, Lund said.
Cermaq’s fish feed operations contributed operating revenues of 10.3 billion kroner last year, compared with sales of 3.3 billion kroner for its fish farming operations, according to its annual report.
Ewos is the world’s largest salmon feed supplier by volume, while its farming unit is the third-largest salmon producer, it said in the report.
Marine Harvest, controlled by billionaire John Fredriksen, now risks “entering a bidding war” for Cermaq, Rabo International said in a report.
The bank already expected Marine Harvest to raise its offer to 115 kroner per share, and after today’s bid, it “might need to further sweeten its offer,” Rabo said. A further increase is to “some extent” justified by the potential for substantial synergies, something the Bain-Altor offer lacks, it said.
Marine Harvest gained as much as 1.2 percent, the most since June 14, and closed 1.1 percent higher at 5.965 kroner in Oslo. That extends the stock’s advance during the last 12 months to more than 60 percent.