Tuesday, February 5, 2013

STX OSV

STX OSV: Counter seeing 3x stronger volumes today, after appointing EY as the independent financial adviser (on 28 Jan 2013) on Fincantieri's offer of $1.22/ share (made on 21 Dec 2012). Based on the Pre-Conditional mandatory cash offer announcement made 21 Dec 2012, and the Formal Announcement made by the Company on 23 Jan 2013, EY should come up with its financial advice, together with STX OSV's directors recommendation on the offer- before the end of this week (before/ on 8 Feb 2013). Current share price of STX OSV at $1.245; Market seems to be pricing 2 possible scenarios: 1) Fincantieri has to increase its offer if the Group intends to take Company private; 2) Deal falls through, and the overhang on STX OSV will be removed, as the current discount on valuation of 4.6x P/E is lower than its sector peers. STX OSV is considered a higher tier O&M shipbuilder with a niche clientele.

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