STX OSV

STX OSV: Citi note that The Maeil Business Newspaper (South Korea's main daily business newspaper) has reported, citing unidentified industry officials, that the STX Group has reached an agreement to sell its 50.75% stake in STX OSV to Italian shipbuilding Fincantieri and PE firm, Carlyle Group, at about $1.60 / share. Report states that a preliminary agreement is expected to be signed some time this week. House note that if the deal goes through, it will most likely trigger a mandatory offer (Fincantieri and Carlyle appear to be acting in concert) which, under local takeover rules, must be at a consideration not less than the highest price paid by the offeror within six months prior to the offer period. Given the min consideration stipulated by law, $1.61 will likely be a near-term floor for the stock price. House is unable to ascertain Fincantieri’s and Carlyle’s intent on taking the STX OSV private, but a general offer price close to $1.61, may signal that the acquirers are not interested in full control. Add that a 10-20% upside ($1.80-1.90 general offer price) is probable should Fincantieri and Carlyle wish to take the grp private.