SSC sale: “You should not exclude bids from financial players and companies that today are not in the industry”

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Pareto seafood analyst Carl-Emil Kjølås Johannessen sees many potential buyers of The Scottish Salmon Company (SSC), but excludes Mowi as a potential bidder.

“It seems that a sale of the company is absolutely relevant based on the messages the company has sent out,” said Johannessen to SalmonBusiness.

On Monday, SSC stated that the company is looking for bidders to buy part of or the entire company. Already, several formal non-binding stakeholders have signed up for Daiwa Corporate Advisory, which is hired as a financial advisor to look at strategic options for SSC.

Both inside and outside the industry
Johannessen believes in a wide range of potential buyers for the salmon farming company.

“Potential bidders are probably other players in the industry, and probably especially those who are present in the UK already. With the exception of Mowi who probably has too much market share,” he said,

“Otherwise, other salmon companies that are not in the UK are probably also interested. Nor should one exclude more financial players and companies that today are not in the industry,” he continued.

We saw such a situation with China’s Joyvio acquisition of Australis in Chile in 2018.

Valuation
Pareto has a price target of NOK 23.50 on SSC today. On Tuesday morning, the share price has passed NOK 25 and gives the company a market value of EUR 431.8 million.

“This is based on 2019 and 2020 multiples which are somewhat lower than what we use on the sector on average. The reason for this is both the low liquidity in the share and the large variation in earnings we have seen historically,” said Johannessen.

If it becomes relevant with regard to a possible sale, the seafood analyst is more uncertain.

“In the event of a sale of the company, the liquidity discount will not be as relevant, and the price someone is willing to pay may possibly exceed our price target somewhat,” concluded Johannessen.