The Private Equity firm, Searchlight Capital Partners, offers SEK 7:75 per share conditional on 70 percent acceptance. We see a fairly good opportunity for alternative, and ultimately higher bids, than this. (This is a translation of our note in Swedish published earlier today)
Searchlight Capital is supported by Opus CEO Lothar Geilen and founders Magnus Greko and Jörgen Hentschel, with a combined 21 percent of the shares. Also Henrik Wagner Jörgensen has expressed his support, which then adds up to 25 percent of total shares.
RWC turned down the offer
The offer is certainly a decent premium compared to share price levels lately. 30 percent versus Friday closing. But the share has been rather depressed in the last few years. It was trading just above SEK 7:75 in early 2017. The largest owner, RWC Asset Management with 19.9 percent of the shares, has already stated that the offer is too low. RWC bought most of their shares in 2017 at around SEK 6-7.
But since the offer is only conditional on 70 percent acceptance, it may still be completed. Among the larger owners, it’s primarily Andra AP-fonden (AP2) that could be decisive. They had 6.4 percent of total shares in the most recent update of shareholders, according to Holdings.
The arguments for the buy-out, presented by Searchlight is that changes in the industry, e.g related to electric vehicles, requires significant investments in Opus. We cannot really determine if there is something new in this information that hasn’t been addressed by Opus earlier. But the interesting thing is that two of Opus managers are involved in the buy-out. That will probably have some influence on which other alternatives that will be available or probable. Also it will probably affect these people’s positions in Opus, if the deal doesn’t go through and everything goes back to square one.
Lazard hired as advisor
Opus board of directors has not yet taken a stand. They will announce their opinion no later than two weeks before January 9th, which is the end of the acceptance period. Lazard has been engaged as financial advisor and they will certainly look for alternative bidders. Which we believe they will find.
Redeyes view is that the SEK 7:75 offer is a bit on the low side. Our valuation indicates a fair value around SEK 10 per share and has been rather unchanged for a period of time. However in a situation of buy-out and a potential bidding contest a number of parameters are at play. Our current view is that there probably will be a higher bid.