Marine Harvest bid on Cermaq shares

According to a press release from Marine Harvest this will create a global industry leader based upon a complete footprint along the Norwegian coast.

But there are certain conditions connected to the bid:

- Launch of the offer is conditional on Cermaq shareholders deciding not to carry out the Copeinca transaction - Offer to be settled with 50 per cent shares in Marine Harvest; 50 per cent cash - Requires acceptance from shareholders representing a      minimum of 2/3 of the Cermaq share capital, including shares already held by Marine Harvest - Offer period to start shortly following the Marine Harvest 23 May annual general meeting - Marine Harvest has acquired 4.7 per cent of the shares  of Cermaq

Marine Harvest ASA ("Marine Harvest") has acquired 4,341,000 shares in Cermaq ASA ("Cermaq"), corresponding to 4.7 per cent of the share capital in Cermaq. The Board of Directors of Marine Harvest has decided that Marine Harvest, if the annual general meeting of Cermaq rejects the proposed equity issues that are necessary to acquire Copeinca ASA ("Copeinca"), will make a voluntary offer of NOK 105 per share for all outstanding shares of Cermaq. The offer price will be adjusted to NOK 104 per share if the proposed dividend of NOK 1.00 per share is resolved at the Cermaq annual general meeting.  

The offer represents a premium of 22 per cent to the last traded price for Cermaq, and a premium 33 per cent above the volume weighted average share price (VWAP) over the last 12 months. The offer consideration will consist of a combination of 50 per cent shares in Marine Harvest and 50 per cent cash, so that shareholders of Cermaq in addition to a considerable and immediate profit can participate in the realization of considerable synergies through ownership in what will be the world's by far largest and most liquid seafood share.

A combination of Marine Harvest and Cermaq will create a global seafood leader based upon a complete footprint along the Norwegian coast. A highly profiled and visible international company based in Bergen, built on Norwegian know-how, will yield positive effects also for other parts of the marine industry cluster in Norway.

- "In our view, no other industrial combination than Cermaq and Marine Harvest is better suited to lift both the companies and the Norwegian marine industry into a position of global leadership. We will maintain all significant parts of the companies in a strong, world class company; offering an integrated value chain from feed to retail sales. We believe a company such as this should be built not through increased exposure towards fisheries and the raw materials markets, where fish meal is being phased out as the base of marine feed. Instead, we wish to build an integrated protein company emphasizing feed, farming and value-added processing; moving away from the traditional raw materials role of Norwegian companies. Thus, we have made the offer conditional on the annual general meeting of Cermaq declining to issue the shares required to carry out the Copeinca transaction", says chairman Ole-Eirik Lerøy of Marine Harvest. Marine Harvest will itself vote against the Cermaq share issues with its shares.

The offer will treat all shareholders, including the government, equally. To carry out the transaction, Cermaq must change its company bylaws, and Marine Harvest will as a result propose that an extraordinary general meeting of Cermaq is summoned in order to approve such a change.

The offer will be adjusted for the proposed NOK 0.10 dividend per share in Marine Harvest and the proposed NOK 1.00 dividend per share in Cermaq. Hence, Cermaq shareholders will receive the proposed NOK 1.00 dividend per share, a cash consideration of NOK 52.00 and the value equivalent of NOK 52.00 in Marine Harvest shares per Cermaq share. The value equivalent will not exceed 8.814 Marine Harvest shares per Cermaq share, but the number of Marine Harvest shares may be adjusted downward if the volume-weighted average share price of Marine Harvest shares in the three trading days preceeding 21 May 2013 exceeds NOK 6.00 per share.

If the proposed dividend of Marine Harvest and/or Cermaq is not approved at the annual general meetings of the companies, Cermaq shareholders will maintain a total consideration of NOK 105 per share, but the offer structure will be adjusted accordingly. The offer will be formalized through an offer document that will be published as soon as practically possible following the 23 May 2013 annual general meeting of Marine Harvest. Foreign investors who are prohibited by law from receiving a partial equity settlement will be offered settlement in cash. The offer document will contain normal terms and conditions in line with regular market practice.

Marine Harvest is offering the shareholders in Cermaq the option to choose between two industrially different transactions with significantly different value creation prospects. Marine Harvest's proposal was not available to the Board of Directors and the two large shareholders in Cermaq when they committed to support the Copeinca transaction. Marine Harvest has contacted the Board of Directors of Cermaq with a proposal to solicit a voluntary offer recommended by the Cermaq Board of Directors. Marine Harvest has, however, been informed by Cermaq that the Board of Directors cannot evaluate or support such a bid, due to agreements already entered into with shareholders in Copeinca. Marine Harvest has therefore chosen to present the offer directly to Cermaq shareholders without having entered into a preceding agreement with Cermaq, in order to offer Cermaq shareholders the opportunity to choose between the two alternatives.

- "The Norwegian Parliament is invited to authorize the government to support the issue of new shares in Cermaq, in order to acquire production of fish meal in Peru. We hope that the Norwegian Parliament will also authorize the government to combine the company with Marine Harvest, according to our proposal. Which transaction that is most desirable, will be decided by the shareholders of Cermaq", says Marine Harvest chairman Ole-Eirik Lerøy.

If Marine Harvest receives sufficient acceptance for its voluntary offer, the shares that Cermaq has already acquired in Copeinca will be sold. Marine Harvest expects that a sale of the Copeinca shares can be made without any loss, as there is a competing offer in the market. Marine Harvest reserves the right to make the bid conditional on acceptance from shareholders representing at least 2/3 of the share capital in Cermaq, including those shares already held by Marine Harvest. The offer is strongly supported by the largest shareholder in Marine Harvest. Marine Harvest is contemplating an issue of a EUR 350 million convertible bond, which is described in detail in a separate press release.  

Marine Harvest will forward its annual general meeting to 23 May 2013, in order to seek authorization to issue consideration shares to Cermaq shareholders. Launch of the offer is conditional on such authorization being granted. Settlement will take place as soon as competition law allows following the end of the offer period, and Marine Harvest is prepared to acquire and settle the shares even though it may not be possible to vote for these shares until regulatory approval has been granted from the applicable competition authorities.

Marine Harvest assumes that each party covers its own costs associated with the offer, but will if the offer is successful not pay any advisory fees incurred by Cermaq and caused by actively trying to solicit competing bids to the offer from Marine Harvest. Any such costs must be borne by the selling shareholders, through a deduction in the cash consideration.

Since Cermaq has been obliged to abstain from offering any assistance to Marine Harvest prior to the offer, Marine Harvest has not had the ability to conduct any due diligence. Marine Harvest will thus ask for such due diligence to be carried out in the offer period, once the Copeinca transaction has been terminated. This will be limited to information on accounts receivable and biological conditions in Chile, and any financial consequences of the Copeinca offer. Marine Harvest has no reason to expect that any material new information will be uncovered and presumes that the due diligence condition may be lifted before the end of the offer period.

Marine Harvest has not considered in detail the potential synergies from a combination of the two companies, but expects the synergy potential to be significant. Marine Harvest intends to continue all business areas in both companies. The companies or operations that cannot be continued under joint ownership, due to competition law or licensing issues, will be sold rather than being discontinued. Marine Harvest believes that the combined company over time will have more employees than Marine Harvest and Cermaq will have on a stand-alone basis, and that its market position and robust business base will create improved job security for its employees. Nevertheless, streamlining of operations will be evaluated on all levels.

- "Marine Harvest has recently acquired significant foreign operations in Poland and Cermaq in Chile. In a challenging world economy, the underlying value drivers that increase demand for our products have continued to develop well, and the challenges with regards to fish health, cost control, financial contingencies and the need for vast research and development efforts have strengthened the need to build large and financially robust companies. This will protect and develop Norway's unique position in this industry", says chairman Ole-Eirik Lerøy of Marine Harvest.

Marine Harvest will solicit the offer without any financial conditions other than the maintenance of Cermaq' current financing programs at current levels and conditions until approval of the transaction has been granted by applicable competition authorities and Marine Harvest is given voting rights for its shares in Cermaq. The acquiring entity will be Marine Harvest ASA. Following settlement of the voluntary offer, a compulsory offer according to regulations will be made as soon as practically possible. Completion of the voluntary and mandatory offer (if applicable) is expected before the end of July, but competition law may lead to adjustments in the time schedule.