Stock market turmoil may shake up more stocks than they intended.
NTS on Friday made a somewhat hesitant bid for its competitor Norway Royal Salmon (NRS).
At the end of June, NTS, dominated by major shareholder Helge Gåsø, had made it clear that it was not appropriate to bid for NRS.
On Friday the bid came at NOK 209 per share, after Gåsø and the rest of the NTS board seemed to have changed their minds.
It is a significant boost for NTS to take over the peer-to-peer competitor. The take-over bid values the equity in NRS at EUR 883 million, which is EUR 180 million below NTS’s own market value.
Loan-financed
In order to bid for all NRS shares, NTS had to provide financing, and that is probably the green light for this funding package that was the reason Gåsø changed his mind.
“Financing is in place, we had to guarantee that for the Stock Exchange,” Helge Gåsø told the news site Dagens Næringsliv just before the weekend.
There could be a lot of loans to deal with. At the end of March, the NTS Group had interest-bearing debt of EUR 424 million.
The excitement is now related to how many NRS shares NTS handles – and how big the bank loan will be. If the debt burden becomes too large, NTS will need more equity.
Source of uncertainty
So far, NTS and Gåsø have increased their ownership from 34.57 per-cent to 35.67 per-cent of NRS. That’s not the big promise, but the bidding period lasts until August 16th.
Norway Fresh, which holds 10.2 per-cent of NRS, has already rejected the bid.
But more shareholders could be shaken off if the stock market turbulence that began this week continues. That could be a source of uncertainty.
Given that Oslo Stock Exchange and other markets are experiencing a significant correction in the coming weeks, other equities and sectors may appear cheaper relative to NRS, where the bid has set the floor until the 16th of August. This may tempt shareholders to sell, and instead weigh up in other discounted companies.
Fusion
NTS’ catch in NRS will lay the foundation and conditions for the next natural stage in the process, namely a merger and closer integration between the two Central Norway fish farmers.
This will form a new Norwegian salmon giant, with a stated goal of producing 100,000 tonnes.
