Cermaq ASA has today on certain conditions secured future  control of more than 50% of the shares in Copeinca through agreements with Copeinca ASA and major shareholders of the company. Cermaq will  launch a voluntary offer for the remaining shares of the company.
The purpose of the transactions and intended voluntary offer is to establish Copeinca, one of the leading fishmeal and fish oil producers in Peru, as a new business unit for fish meal and fish oil in Cermaq and to ensure essential marine ingredients for the feed customers of EWOS. The combined entity will leverage on the significant competence and experience within both organizations to improve the performance and quality of different fish meal and fish oils, optimize feed formulations as well as supplying scarce raw materials to the salmon farming industry. The transaction will further support Cermaq's vision as an integrated marine protein company.
Copeinca is a publicly listed company at the Oslo Stock Exchange and is the second largest holder of Peruvian anchoveta quota with 10.7% of the north central quota. Copeinca reported total revenues in 2012 of USD 314 million and an operating profit of USD 75 million. The company currently operates 28 fishing vessels and 5 factories in Peru and sold a total of 178,753 mt fish meal and 41,932 mt fish oil in 2012. The number of employees in the company as of 31 December 2012 was 1,466. Â
The combined company is expected to benefit from annual synergies in the range of NOK 250 - 270 million (pre-tax). The offer of NOK 59.70 per share values the entire share capital of Copeinca at NOK 3,492 million on a fully diluted basis, based on the shares outstanding as of 4 April 2013 prior to the share issue directed towards Cermaq ASA and excluding the proposed dividend to shareholders, corresponding to an enterprise value of NOK 4,770 million and the transaction is expected to be EPS accretive in 2013 even excluding synergies.
"This transaction, when completed, will strengthen Cermaq's position as an integrated marine protein company with a significant global market position in marine raw materials which are essential for the salmon industry" says CEO Jon Hindar in a comment.
"Copeinca and EWOS share a significant knowledge base which will create long term benefits for our customers and significant synergies and corresponding value creation for our shareholders", Mr Hindar further states.
"We look forward to complete this transaction and start the cooperation with the employees and management team and key stakeholders of Copeinca" Jon Hindar concludes.
"I am delighted to welcome Cermaq as a large shareholder in Copeinca and for their intention to put forward a voluntary offer for all the shares in the Company. I strongly agree with the long term strategic rationale, creating a unique position that will enhance value throughout the value chain. The Peruvian Fish and Fish oil Industry will benefit from the entrance of Cermaq, which, consistent with the values of Copeinca, is highly focused on social responsibility, sustainability and R&D. We look forward to working closer together with the Cermaq team" says Samuel Dyer Coriat, Chairman of the board of directors of Copeinca.
The Transaction
Several of the largest shareholders, including Dyer Coriat Holding SL and Weilheim Investments SL, holding in total 22,663,230 shares in Copeinca, have entered into irrevocable agreements to sell their shares in Copeinca at a price of NOK 59.70 per share, out of which 40% will be paid in cash and 60% in Cermaq shares and shareholders holding 342,373 shares have entered into irrevocable agreements to sell their shares for NOK 59.70 per share in cash. In addition, Cermaq has purchased 11,700,000 shares in Copeinca through a directed issue of new shares and 852,993 treasury shares from the company. Â The acquired shares currently provide Cermaq with an ownership of 17.9% of Copeinca. Together with the shares to be acquired pursuant to the irrevocable purchase agreements, Cermaq controls 50.7% of Copeinca's share capital subject to approval from the shareholders of Cermaq ASA.
Cermaq will launch a voluntary cash offer for the remaining shares in Copeinca with a consideration of NOK 59.70 per share.
The board of directors of Copeinca has unanimously resolved to recommend the intended offer from Cermaq to Copeinca's shareholders and will in due course publish a formal statement supporting the intended offer from Cermaq.
To partly finance the acquisition, maintain a solid financial capacity to support Cermaq's investment grade rating and to retain financial flexibility to secure profitable growth, Cermaq intends to launch a rights issue of NOK 1.6 billion, which will, save for the Norwegian Government's pro rata portion, be fully underwritten.
Strategic rationale
As a result of the transactions, the combined entity will leverage on the significant competence and experience within both organizations to improve the performance and quality of different fish meal and fish oil, optimize feed formulations as well as supplying scarce raw materials to the salmon farming industry. The combination with Copeinca will further support Cermaq's vision as an integrated marine protein company.
The combination of Cermaq and Copeinca, following successful completion of the transactions, will enable exchange of information across the value chain, improved research and development on marine raw materials and significant knowledge based synergies through product improvement. Synergies will also be realized within logistics and certain other functions and the transaction is expected to provide significantly lower financing costs related to Copeinca's interest bearing liabilities. Annual pre-tax synergy potential is estimated in the range of NOK 250 - 270 million when fully phased in from 2017, while substantial synergies are expected already from 2014.
Consideration and financing
The total consideration for 100% of the outstanding shares in Copeinca will be NOK 3,492 million, out of which NOK 2,681 million will be paid in cash and the remaining NOK 812 million in shares in Cermaq. The value per consideration share shall be equal to the price per share in Cermaq calculated on the basis of the VWAP of the shares in Cermaq based on volume and price as quoted on Oslo Boers during the five trading days preceding the Offer becoming unconditional.
The transaction will be financed through a fully underwritten NOK 1,600 million rights issue in Cermaq as well as using existing and new credit lines provided by Cermaq's relationship banks.
The Norwegian state, represented by the Ministry of Trade and Industry, Cermaq's largest shareholder with a shareholding of 43.5% of the issued shares, has confirmed its intention to participate in the rights issue and to vote in favour of the resolutions related to the transaction at an extraordinary general meeting of Cermaq. The Ministry of Trade and Industry will put forward a parliamentary proposition to participate for their pro rata share of the rights issue. The Government Pension Fund Norway (Folketrygdfondet), owns 5.4% of the issued shares, is supportive of the transaction and the rights issue, and has entered into an agreement to underwrite and subscribe for its pro rata share of the rights issue. The remaining share of the rights issue is underwritten by ABG Sundal Collier and DNB Markets, subject to customary terms and conditions.
Ownership and corporate governance
It is expected that the Ministry of Trade and Industry will own between 40.0 and 40.5% of the company following completion of the Offer, from issuance of consideration shares based on Cermaq's current share price and adjusting for the proposed rights issue. Dyer Coriat Holding SL and Weilheim Investments SL will upon completion of the Offer combined becomes Cermaq's largest private shareholder with a shareholding of approximately 7.5% based on Cermaq's current share price and adjusting for the proposed rights issue. These shareholders have accepted a two year lock up period for the shares in Cermaq they receive as part of the transaction.
Cermaq has undertaken to use its reasonable endeavours to ensure that Copeinca's Chairman, Samuel Dyer Coriat will be represented on the board of directors of Cermaq.
Copeinca's board of directors has undertaken to use its reasonable endeavours to facilitate the election of one board member nominated by Cermaq to the Copeinca board at Copeinca's annual general meeting to be held on 12 April 2013.
Cermaq has during the process gained a very favourable view of the management team of Copeinca and upon completion of all transactions, we look forward to a close cooperation between the current Copeinca management team and the management teams in the Cermaq group.
Transaction structure and timing
The contemplated acquisition consists of the following:
- A completed directed issue of 11,700,000 shares at NOK 59.70 per share in Copeinca towards Cermaq
- A completed purchase of 852,993 treasury shares from Copeinca at NOK 59.70 per share
- Irrevocable agreements for the sale of 22,663,230 shares in Copeinca to Cermaq from key shareholders at NOK 59.70 per share out of which 40% will be paid in cash and 60% will be paid in Cermaq shares
- Irrevocable agreements for the sale of 342,373 shares from other Copeinca shareholders to Cermaq at NOK 59.70 per share with cash consideration
- A voluntary cash offer to acquire all the remaining shares in Copeinca at NOK 59.70 per share.
All prices per share above are adjusted for the proposed dividend to Copeinca shareholders and Cermaq will not receive any dividends on its recently acquired shares.
The complete details of the Offer, with all terms and conditions, will be included in an offer document to be sent to Copeinca shareholders following the review and approval by the Oslo Stock Exchange in accordance with the regulation of voluntary offers in the Norwegian Securities Trading Act Chapter 6. The completion of the above-mentioned irrevocable agreements for sale of shares is subject to certain conditions, including the completion of the Offer and the rights issue.
Cermaq will call for an extraordinary general meeting, which is expected to be held towards the end of May 2013, following an approval by the Norwegian Parliament of the share subscription of the Ministry of Trade and Industry in the rights issue. The subscription price in the rights issue will be set no later than four days before the extraordinary general meeting. The subscription period will commence shortly after the extraordinary general meeting, with the rights issue targeted for completion in June 2013. The number of consideration shares in Cermaq to be issued to the key shareholders in Copeinca who has agreed to remain as shareholders in Cermaq will be based on the volume weighted average price per share ("VWAP") in Cermaq based on volume and price as quoted on Oslo Boers during the five trading days preceding the time when the transaction becomes unconditional which is upon completion of the proposed rights issue in Cermaq. Subscription rights will only be granted to registered Cermaq shareholders as of the date of the extraordinary general meeting.Â
Financial effects
The transaction is expected to be EPS accretive for Cermaq's shareholders in 2013 based on current consensus estimates and excluding synergies. Intangible assets currently estimated to approximately NOK 1 billion will be recognised in Cermaq's accounts. The size of the rights issue has been determined in order to maintain a solid financial capacity and flexibility and to support profitable growth in all Cermaq's business units going forward. Leverage based on year end 2012 figures will increase somewhat and the pro forma equity ratio is estimated to be 46% based on the combined 31 December 2012 figures.Â
Conditions
The voluntary offer, the acquisition of all shares in Copeinca and the rights issue are subject to certain conditions, including the required approval by the Norwegian Parliament
Advisors
ABG Sundal Collier is acting as financial advisor and Schjoedt is acting as legal advisor to Cermaq in connection with the Offer.
Contact details
Jon Hindar,                      CEO, phone: + 47 23 68 50 10, mobile: +47 977 48 829
Tore Valderhaug, Â Â Â Â Â Â Â Â Â Â CFO, phone: + 47 23 68 50 38, mobile: +47 995 60Â 925
Dag Sletmo                       IR manager: phone + 47 23 6850 26, mobile:+47 95 28 61 34
Invitation
Cermaq and Copeinca will host a joint press conference at 10:00 am CET today at Felix Konferansesenter, Bryggetorget 3, Aker brygge, 0125 Oslo which will also be available on webcast.
The webcast is available via the link below. Participants should register approximately 5 minutes prior to the start of the webcast.
Link to webcast: http://media01.smartcom.no/Microsite/start.aspx?eventid=7076
A conference call will be hosted at 13:30 CET. To participate in the conference call, please dial the appropriate number below five minutes prior to the call:
Norway: Â Â Â Â Â Â Â Â Â Â Â Â +47 21 06 61 13
UK: Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â +44 20 7153 9154
US: Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â +1 877 423 0830
Pin Code            984344#
Please see the related investor presentation for further details about the transaction.
Additional information about Copeinca
Copeinca is one of the largest fishmeal and fish oil producers in Peru. The Company produces its fishmeal and fish oil from anchovy harvested off the coast of Peru, and most of its production is exported. Key countries for export are China, Japan, Germany, Canada, Chile and Denmark. Typical customers are fish and animal feed producers as well as refineries for omega-3 products. Copeinca runs its operations out of Lima and has its own fleet. The Company operates 5 plants located in strategic locations all around the Peruvian coast line. The company has around 1,400 part and full time employees.
Board of directors
Copeinca's board of directors consist of the following persons:
- Samuel Dyer Coriat, Chairman
- Kristjan Th. Davidsson, Vice Chairman
- Samuel Dyer Ampudia, Director
- Luis Dyer Ampudia, Director
- Sheila Dyer Coriat, Director
- Marianne Elisabeth Johnsen, Director
- Mimi Berdal, Director
Management
Copeinca's executive management team consists of the following persons:
- Pablo Trapunsky, Chief Executive Officer
- Clemencia Barreto, Logistics Manager
- Francesca Carnesella, Corporate Affairs Manager
- Angel Chiri Gutiérrez, Chief Financial Officer
- Giuliana Cavassa, Legal Manager
- Carlos Cipra, Controller
- Nathalie Mas, Human Resources Manager
- Diego Cateriano, Fleet Manager
- Renato Balarezo, Sales Manager
Interests of certain persons in the Transaction
Cermaq has in connection with the transaction entered into agreements to purchase shares in Copeinca from Dyer Coriat Holding SL and Weilheim Investments SL in which the following members of Copeinca's board of directors have interest. Â
- Samuel Dyer Coriat
- Samuel Edward Dyer Ampudia
- Sheila Dyer
- Luis Dyer Ampudia
In addition, Cermaq has entered lock up agreements with Dyer Coriat Holding SL and Weilheim Investments SL as described above.
Key financials
Key figures from Copeinca's consolidated statement of income and balance sheet for the years ended 31 December 2012, 2011 and 2010 are included below. Additional financial information can be found at Copeinca's web page www.copeinca.com.
Â| CONSOLIDATED STATEMENT OF INCOME | For the year ended 31 December | ||
| USD '000 | 2010 | 2011 | 2012 |
| Sales | 233 042 | 254 478 | 314 219 |
| Cost of goods sold | -151 037 | -143 085 | -196 862 |
| Gross profit | 82 005 | 111 393 | 117 357 |
| Â | Â | Â | Â |
| Selling expenses | -9 971 | -12 596 | -17 271 |
| Administrative expenses | -12 311 | -13 780 | -13 863 |
| Other income | 12 017 | 5 362 | 1 844 |
| Other expenses | -73 280 | -16 120 | -12 965 |
| Operating profit / loss | -1 540 | 74 259 | 75 102 |
| Â | Â | Â | Â |
| Finance income | 502 | 608 | 2 586 |
| Finance costs | -23 457 | -21 007 | -21 097 |
| Exchange difference, net | 7 370 | 10 375 | 14 764 |
| Profit before income tax | -17 125 | 64 235 | 71 355 |
| Â | Â | Â | Â |
| Income tax expense | 10 632 | -16 466 | -21 758 |
| Profit for the year | -6 493 | 47 769 | 49 597 |
| Â | Â | Â | Â |
| CONSOLIDATED BALANCE SHEET | For the year ended 31 December | ||
| USD '000 | 2010 | 2011 | 2012 |
| ASSETS | Â | Â | Â |
| Non-current assets | 592 230 | 627 077 | 666 530 |
| Inventory and receivables | 43 088 | 105 947 | 48 570 |
| Cash and cash equivalents | 34 201 | 60 490 | 39 090 |
| Total assets | 669 519 | 793 514 | 754 190 |
| Â | Â | Â | Â |
| Â | Â | Â | Â |
| EQUITY AND LIABILITIES | Â | Â | Â |
| Equity | 331 737 | 388 643 | 410 120 |
| Long term borrowings | 201 500 | 218 488 | 201 919 |
| Other long term liabilities | 95 896 | 88 327 | 92 927 |
| Current borrowings | 16 042 | 47 788 | 21 920 |
| Other short term liabilities | 24 344 | 50 268 | 27 304 |
| Total equity and liabilities | 669 519 | 793 514 | 754 190 |
| Â | Â | Â | Â |
| OTHER KEY FIGURES | For the year ended 31 December | ||
| USD '000 (unless specified) | 2010 | 2011 | 2012 |
| EBITDA | 76 227 | 106 466 | 103 807 |
| Net interest bearing debt | 183 341 | 205 786 | 184 749 |
| Equity ratio (per cent) | 49.5% | 49.0% | 54.4% |
Cermaq is not aware of any significant assets or liabilities that are not shown in Copeinca's balance sheet.
About Cermaq - Cermaq is an international group of companies with activities in fish farming, production of salmonid feed and research in aquaculture. Cermaq has operations in Norway, Chile, Canada, and Scotland, the main geographic regions for salmon and trout farming, and in Vietnam. Through its business unit EWOS, Cermaq ranks as the world's largest producer of feed for salmonids. The business unit Mainstream is one of the world's leading farming companies of salmon and trout. The group had sales of around NOK 11.8 billion in 2012. Cermaq is listed on the Oslo stock exchange with ticker code CEQ. www.cermaq.com (http://www.cermaq.com/)
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Cermaq ASA via Thomson Reuters ONE
