Falcon Energy / CH Offshore

Falcon Energy / CH Offshore: Falcon Energy (FEG) has made a voluntary conditional cash offer to acquire the remaining 70.93% stake in CH Offshore (CHO) for $247.5m, or $0.495 per share. The offer price represents a 6.45% premium over the last traded price of CHO, and is part of FEG's plan to acquire more vessels to broaden the number of vessel types and to cater to a broader group of customers. FEG believes that by increasing its control of CHO, it will be able to explore opportunities to unlock synergies in the CHO group’s businesses, and aims to embark on programmes to maximise operational efficiency and optimise capital management of the enlarged group, should the acquisition materialize. The acquisition will be funded by internal cash and bank borrowings, and FEG intends to maintain the listing status of CHO. Based on the offer price of $0.495, the deal values CHO at 1.08x P/B and 10.6x FY14 P/E. In light of the recent market rout amongst O&M counters, we will not be surprised to see more share buybacks or M&A’s going forward, given that valuations for some counters are undemanding at current levels following the sell-off.