China Fishery/ Pacific Andes

China Fishery/ Pacific Andes: China Fishery makes the third takeover bid for Copeinca, an offer of NOK68.17/share totalling NOK4b (US$653m). The new offer is a 14% increase from its second bid of NOK59.70/share, and 27% above its first bid of NOK53.85/share. The group currently owns 8.22% stake and another 8.97% in option shares. The group has received pre-acceptances of 57.04%, giving them an effective 74.23% control with the new offer. Seems like this deal is likely to go through, with the pre-acceptances from some of the majority stakeholders that were against the deal previously. The acquisition will raise China Fish’s catch quota in North and Central Peru from 6.2% to 16.9%, and its catch quota in South Peru from 11.7% to 14.7%. It will also boost China Fish’s positioning as the largest fishmeal company in Peru and one of the top producers in the world. China Fishery had previously raised $344.2m from its rights issue and secured a loan facility of up to US$295m, on top of its cash balance of US$26m. With the new offer of US$653m, China Fishery will require an additional US$75.4m on top of its US$295m loan facility. However with the new offer, China Fishery's gearing will increase substantially from 75% (28 Mar 13) to 118%. Fitch has cautioned that Copeinca's debt ratios would soar above 5x from 2.3x if China Fish’s bid is successful. China Fish now trades at 5.2x historical P/E and 0.4x P/B. According to Bloomberg consensus, China Fish has an estimated 12-mth TP of $0.37.