Expected Higher Offer
The investment thesis on Brødrene Hartmann, a Danish-listed egg packaging producer, was posted on the Value and Opportunity blog as well as Battlecat over at Twitter. In September, HART received a DKK300/share takeover proposal from its controlling shareholder, Thornico, who holds a 69% stake. The shares are trading at a 10% premium to this offer, reflecting the market’s anticipation of a higher bid. The initial offer appears opportunistic lacking any premium vs the pre-announcement levels. Furthermore, HART’s shares have struggled to rebound this year, despite an improvement in operational performance as highlighted by two upward revisions of guidance in 2023. Media reports indicate that equity holders, with a combined 6% ownership, have already expressed their opposition to the offer. Given that the transaction requires approval from 90% of shareholders, the current bid is very likely to be rejected. Several factors suggest that a higher proposal from Thornico could be on the horizon. Thornico’s commitment to potential privatization is evidenced by its recent replacement of two directors to gain full control of the board. Thornico also owns Sanovo, a technology provider in the egg production sector, suggesting a strategic angle for the takeover. HART is presently Thornico’s sole publicly listed holding. The shareholder meeting is scheduled for October 16. Battlecat has suggested that HART’s fair value is likely to be north of DKK 500 per share, representing a 52% upside over the current share price levels. Even if a higher bid fails to materialize, the downside seems limited, given HART’s modest valuation at 6.7x EV/2023 EBIT.
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Thornico has acquired another 10% of shares for about 80% total holding and ups offer, in case of acceptance, to 360 DKK. As approval is by 90% of votes cast, the chances of the bid getting rejected seems to narrow.
“Subject to approval at the extraordinary general meeting and Nasdaq Copenhagen’s approval of delisting the shares, Thornico has stated its intention to offer purchasing all shares from the other shareholders at a price of DKK 360 per share with a nominal value of DKK 20.”
Does anyone have an idea how the offer process would work?
E.g., a voluntary tender offer at IB to sell once the vote went through? Or would the process be more complicated?
Announcement: https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4390655&lang=en-GB&companycode=dk-hart&v=
You should receive an offer notification from your broker, and it will provide instructions on how you can vote. In this situation, it seems reasonable to consider selling and moving on. The stock has risen by 18% since the write-up levels, with less than a 2% spread remaining until the closing. Meanwhile, there is a risk that regulators could reject the bid (not highly likely), and there is at least a 4-week waiting period until the close.