Since 3 months ago, it was reported that STX Group is likely to sell off its 50.75% stake in STX OSV. Some news speculated that the deal would be done in April, while others speculated in May. According to Maeil Business Newspaper 18 May 12, (South Korea main daily business newspaper), STX Group seems to be close to signing a preliminary agreement to sell 50.75% stake in STX OSV to Italian shipbuilding Fincantieri and private equity firm Carlyle group at around $1.60. The newspaper cited that the agreement may be signed as early as the following week. However, nothing was announced during the period.
Next came another announcement on 28 May on Hellenic Shipping News which quoted a source from Korea JoongAng Daily. In the report, it mentioned that STX Group is planning to sell the STX OSV which they value at 2 trillion Won for 1 trillion Won. Based on personal calculation, this amounted to around $1.76-1.83 per share. STX Group added that one Italian shipper and one Singapore shipper have expressed interest.
If this were true, Singapore’s takeover guidelines require any buyer of more than 30% of a publicly traded company to make an offer for the rest of the stock. Citigroup in a May report speculated that the offer price may be higher 10-20% if the parties want to take STX OSV private.
Notwithstanding the potential takeover, STX OSV has tumbled 23% from $1.82 on 22 Mar to close at $1.395 on 1 Jun vis-a-vis STI’s 8.2% decline over the same period. It may seem like market does not expect the deal to go through that soon or they may expect a lower price tag. Given STX Group’s existing finances, it should be in their interest to divest its stake in OSV in the near term so as to bolster their finances.
For readers who are not familiar with STX OSV, STX OSV has a niche in high end OSV with a market share of 20%-30% mkt share. Market cap is S$1.7b. Ave analyst target price is $1.87. Please refer to Annexes A & B below for more information on STX OSV.
As usual, the devil is in the details. Readers who are interested can drop me an email at
crclk@yahoo.com.sg and i can send you some useful research reports on STX OSV)
*This was sent out to my clients last Sunday afternoon.
Annex A: Description of STX OSV
Source: Bloomberg
Annex B: Analyst target prices
Source: Bloomberg
Disclaimer
The information contained herein is the writer’s personal opinion and is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided herein do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or invest in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein are suitable for you. The writer will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials appended herein. The information and/or materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
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