Merger Arbitrage – 12% Upside
WinterGems has recently highlighted the pending takeover of Clasquin, a France-listed provider of sea and air freight forwarding and logistics services. Company’s major shareholder/chairman Yves Revol (42% ownership) has entered into exclusive negotiations to sell his stake in Clasquin to the shipping giant MSC at an EV of €325m. The sale of chairman’s stake is expected to be completed in Q1’24 following certain employee representative body-related procedures and regulatory approvals. After this, MSC intends to launch a tender offer for Clasquin’s remaining shareholders. An offer at the same terms would result in an equity value of €311m or €136/share (vs €124/share currently) after factoring in Clasquin’s cash generation in the interim and minority liabilities. Clasquin shareholders would also likely receive a dividend of €2.5/share in Jul’24, increasing the total potential upside to 12%. The tender for the remaining shares is expected to be completed by Sep’24. The likelihood of the buyer backing away seems very low as MSC is among the world’s largest shipping companies and has closed a number of acquisitions over recent years. The chances of Clasquin’s chairman changing his mind are also slim as the offer comes at a substantial premium of more than 50% to pre-announcement levels and values Clasquin fairly relative to competitors.
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ALCLA price did move up to around €136/share (vs the tender price of €142.03) in March and stayed there until last week. Now it is trading at €130/share (9% spread).
There will also be a dividend of €2.5/share in Jul’24 (not sure it will be deducted from the tender price).
“SAS will thereafter file a tender offer with the Autorité des Marchés Financiers (AMF) for the remaining shares in the capital of Clasquin, at the same price of EUR 142.03 per share. SAS intends to proceed with a squeeze-out should applicable conditions be met upon closing of the offer.”
If I understand correct the dividend was cancelled, so shareholders will receive €142.03 in the tender, or 7% spread today:
“The Board of Directors decided to propose to the Combined Annual General Meeting of 5 June 2024 that no dividend be paid due to the current negotiations between CLASQUIN and SAS Shipping Agencies Services Sàrl, a subsidiary of MSC Mediterranean Shipping Company SA.”
While I have not seen any news that might have driven the recent decline in stock, the timeline till minority shareholders get paid (i.e. a tender for all shares) is probably around 6-9 months. Chairman’s stake sale to MSC is expected to close by the end of the year and the mandatory tender will follow afterwards. With this in mind, 7% spread does not look very attractive. There is also a risk (albeit very tiny) that the sale will get derailed in the meantime.