Norwegian Public M&A Deal Study - 2020 Edition

Norwegian Public M&A Deal Study 2020 Edition

BAHR

FOREWORD Welcome to the 2020 edition of BAHR’s Norwegian Public M&A Deal Study. In this survey, we examine the latest developments on key terms for takeovers on the Oslo Stock Exchange.

The number of takeovers on the Oslo Stock Exchange has been stable in recent years of some 5-10 annual transactions and takeover attempts, and 2019 was no exception with five concluded deals. Over time, we have seen that bidders have been equally shared between industrials and financial sponsors.

The predominant transaction structure has been recommended conditional voluntary tender offers based on a transaction agreement with the target board.

The Norwegian M&A market has over the past few years seen a considerable number of takeovers and consolidations in the oil & gas sector, covering both

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exploration, production and infrastructure.

A strengthened focus on technology and sustainability is emerging across a multitude of sectors, and we are increasingly retained to advise on deals where tech assets are the predominant value drivers. Interest in the healthcare sector is also on an upward trajectory and will likely generate more M&A opportunities going forward.

Transaction agreements between the bidder and the target’s board of directors continue to be used in the Norwegian market although we have experienced that they have been excluded (or even banned) in certain other European jurisdictions.

Typically, the target board allow for due diligence prior to announcement, recommends the offer at launch and agree to non-solicitation with a “fiduciary out”. It is also customary that the bidder obtains pre-acceptances from larger shareholders.

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Break fees are not that common, and if used they are typically limited to cost coverage.

Although certainty of funds is not a legal requirement under the Norwegian voluntary tender offer rules, almost all transactions have financing in place at the time of launch.

Norway has detailed regulations for mandatory takeover offers, but significantly more relaxed rules on voluntary tender offers. The Oslo Stock Exchange acts as the Norwegian takeover supervisory authority.

Amendments to the takeover rules have been proposed, including proposals to limit the use of “hard irrevocables”, establish more detailed minimum price regulations and exemptions in financial distress situations. We have, together with the support from many of the most active investment banks, welcomed the proposed amendments – though with the express need for more predictability for the bidder.

The most debated transaction in 2019 was the fight for the Oslo Stock Exchange itself

by the competing bidders Euronext and Nasdaq. Advising Nasdaq, we were very much into the game. Euronext launched its bid without target board support on Christmas Day igniting debates on board duties and manoeuvrability – as well as the future of the Norwegian capital markets.

Although the Oslo Stock Exchange was not listed on a regulated market (quoted on the N-OTC), the battle revealed unparalleled dynamics for public transactions.

BAHR continuously advises on a large number of the public M&A transactions in Norway, giving us deep insight on market terms and prevailing trends. We actively seek to employ this experience to provide up-to-date and value added advice and services to our clients.

This study shows statistics on key terms and conditions for public takeovers in the period for 2015 – 2019.

Enjoy the read!

Lars Knem Christie Partner

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The Legal M&A Powerhouse in Norway • Corporate M&A has formed the core of BAHR’s

practice since its inception over 50 years ago and transactional work is at the very heart of everything that BAHR does.

• Our M&A team has consistently been ranked Tier 1

by all leading rating agencies, and it remains so today. Our practice covers all types of private and public transactions, including private acquisitions, public takeovers, co-investments, other syndicated transactions, restructurings and exits, joint ventures, IPOs, mergers and demergers.

clear leader in Norway for M&A work in the private equity arena” Legal 500

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an excellent combination of legal knowledge and market awareness” Legal 500

• The team draws on expertise from across the firm

and all main industries to bring clients a comprehensive service with a commercial and tailored outlook.

• We believe well-organized and focused teams

based on the ”best person for the job” principle are best suited to efficiently work on complex matters. While we will never compromise on the staffing and resources required to do the job, we aim at a lean and cost-efficient approach.

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Key terms & statistics

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The targets Industry classification of targetâ&#x20AC;&#x2122;s business

3%

60 %

4% 18 %

11 %

IT Financials

18 %

3%

54 %

Energy Industrials

7%

Enterprise value

Consumer Health Care Real Estate

50 % 39 %

40 % 30 % 20 %

Utilities

36 %

7%

10 % 0%

0%

Over 1 EUR MEUR 250 > MEUR 100 > Below billion 1 EUR billion MEUR 250 MEUR 100

Transactions reviewed: 28

Transactions reviewed: 28

The bidders Bidder type

Bidder home jurisdiction

50 % 43 % Industrial bidder Financial bidder

46 %

40 % 30 %

29 %

54 % 20 %

14 %

10 % 0%

Transactions reviewed: 28

11 % 4%

Norway Europe Other ex. Nordic

Nordic US ex. Norway

Transactions reviewed: 28

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Transaction structure and result Voluntary or mandatory?

60 %

Consideration offered

100 %

54 % 46 %

50 %

86 %

80 %

40 %

60 %

30 % 40 %

20 %

20 %

10 % 0%

Voluntary

Mandatory

Voluntary followed up by mandatory

11 %

4%

0% 0%

Take-over bid Take-over bid Take-over bid with cash with all shares with cash and shares

Transactions reviewed: 28

Transactions reviewed: 28

Voluntary offers â&#x20AC;&#x201C; result

Mandatory offers â&#x20AC;&#x201C; result*

93 %

100 %

40 %

38 % 31 %

80 %

31 %

30 %

60 % 20 % 40 % 10 %

20 %

7%

0% 0%

Voluntary offer followed by a mandatory offer followed by squeeze-out

Voluntary offer followed squeeze-out

Transactions reviewed: 14

Threshold for squeeze-out not obtained

0%

0%

Below 50% 50% -<2/3

2/3 -<90%

Transactions reviewed: 13 *Ownership in Target following expiry of the mandatory offer period

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90% and above

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Initiation of transaction process Did the target publicly disclose that it undertook a review of strategic alternatives before contact with bidder was established? (voluntary offers only)

18 %

Did the bidder and the target enter into a formal transaction agreement? (voluntary offers only)

27 % Yes No

Yes No

73 %

82 %

Transactions reviewed: 15

Transactions reviewed: 15

What was the target board of directorsâ&#x20AC;&#x2122; recommendation of the offer?

How many fairness opinions were obtained by target?

7%

9% Recommended

21 %

Neutral

2 Opinions

41 %

1 Opinion

Negative 7%

64 %

Transactions reviewed: 28

None

None 50 %

Transactions reviewed: 28

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Bidderâ&#x20AC;&#x2122;s ownership in the target at the launch of the offer 45 %

What percentage of target securities were pre-accepted? (voluntary offers only)

43 % 39 %

40 % 35 %

40 %

25 %

30 %

20 % 15 %

20 %

11 % 7%

10 %

10 %

5% 0%

20 %

20 %

11%-30%

31%-50%

7%

0% 0%

1%-30%

31%-50%

51%-100%

Transactions reviewed: 28

47 %

47 %

40 % 30 % 20 %

7%

10 %

0% 0% Soft with matching right

Hard

Transactions reviewed: 15

0%-10%

Transactions reviewed: 15

If pre-acceptances were obtained, was it hard (no right to withdraw) or soft (right to tender in higher offer)?

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53 %

50 %

30 %

50 %

60 %

Soft without matching right

Several types

51%-100%

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Independent statements on offer Did The Oslo Stock Exchange require that an independent third party delivered the statement on the offer pursuant to section 6-16 (4) of the Securities Trading Act?

100 %

100 %

100 % 80 % 60 %

57 %

60 % 43 %

62 %

60 %

40 %

No

40 %

40 %

Yes 38 %

20 % 0%

0%

0%

2015

2016

2017

2018

2019

Total

Transactions reviewed: 26

Key terms of transaction agreement (Voluntary offers only)

Non-solicitation obligation for the target with respect to soliciting other potential buyers?

17 %

8%

Yes No

Was the target board able to withdraw its recommendation of the offer?

Yes

27 %

Not disclosed

Not disclosed

75 %

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73 %

Transactions reviewed: 12

Transactions reviewed: 11

The description of the terms and conditions of the transaction agreement in the offer is sometimes very general and brief.

Hence, this result may cover many differnt variations.

The most common condition is that the board of directors can withdraw its recommendation in the event of a non-solicited bona fide offer which is not matched by the bidder.

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What percentage of the enterprise value was the break fee/cost cover fee?

Where the parties had entered into a transaction agreement, was the transaction subject to a break fee payable by target?

100 % 80 %

Yes Not disclosed

33 %

60 %

67 %

50 %

40 %

25 %

25 %

Below 1.0%

1.0%-1.5%

20 % 0%

Transactions reviewed: 12

Above 1.5%

Transactions reviewed: 4

How much was the break free/cost cover fee?

100 % 80 %

67 %

60 % 40 % 33 % 20 % 0%

0%

0%

0% Below MEUR 5

MEUR 5 MEUR 10

Transactions reviewed: 4

MEUR 10 MEUR 20

Above MEUR 20

Amount equal to incurred transaction costs

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Conditions for completion (Voluntary offers only) Minimum tender treshold

Completion of due diligence

60 %

60 % 50 %

27%

40 %

Yes No

27 %

30 % 20 %

73 %

13 %

10 % 0% 90% and above

50%-80%

Not a condition

Transactions reviewed: 15

Transactions reviewed: 15

Recommendation from the target board

Satisfaction/assurances of regulatory approvals

47 %

53 %

Yes No

27 %

Yes No

73 %

Transactions reviewed: 15

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Transactions reviewed: 15

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Availability of financing

Third party approvals

7% 20 % Yes No

Yes No

80 % 93 %

Transactions reviewed: 15

Transactions reviewed: 15

Conduct of business

No legal action

53 %

47%

Transactions reviewed: 15

Yes No

40 %

Yes No

60 %

Transactions reviewed: 15

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MAC clause

Yes Not disclosed

47 % 53 %

Refers to MACofinthe theoffer target Completion by company the bidder being between signing and completion of the offer. subject to the absence of any material Inadverse most cases, thein, "MAC out" is adverse a "targeteffect change or material business MAC" only, not a market on, the target company between or theindustry period MAC. Theseand andcompletion other variations not of signing of theare offer is shown in the diagram. prevalent. In most cases, the “MAC out” is a “target business MAC” only, not a market or industry MAC. These and other variations are not shown in the diagram.

Transactions reviewed: 15

Transaction timing What was the number of days between the date of the announcement of the intention to make the offer and the closing date?

12 % 8%

32 %

5 months - 1 year 4 months - 5 months 3 months - 4 months

16 %

2 months - 3 months 1 months - 2 months 32 %

Transactions reviewed: 28

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Transactions reviewed Target

Bidder

2019 Scottish Salmon Company

P/F Bakkafrost

Belships ASA

Kontrari AS and Kontrazi AS

Cxense ASA

Piano Software B.V

NextGentel Holding ASA

Telecom Holding 3 AS

Oslo Børs VPS Holding ASA 1)

Nasdaq AB 2)

Oslo Børs VPS Holding ASA 1)

Euronext

2018 Saferoad ASA

SRH Investco AS

Ekornes ASA

QuMei Home Furnishings Group Co. Ltd

Link Mobility Group ASA

Victory Partners VIII Norway AS

Unified Messaging System ASA

Everbridge Holdings Limited

Songa Offshore SE

Transocean Ltd.

2017 Weifa ASA .

Karo Pharma AB

Hafslund ASA

Oslo Energi Holding AS

MultiClient Geophysical ASA

Geoex Ltd

Solvang ASA

AS Clipper

Tide ASA

Det Stavangerske Dampskibsselskab AS

2016 Serodus ASA

Viggo Harboe Holding 2006 ApS

Techstep ASA

Zono Holding AS (Middelborg Invest AS, Datum AS, Cipriano AS and more)

Aurora LPG ASA

BW LPG

Norwegian Property ASA

Geveran Trading Co Ltd

Havfisk ASA

Lerøy Seafood Group ASA

2015 Siem Offshore Inc.

Siem Europe S.a.r.l.

S.D. Standard Drilling plc

Saga Tankers AS

Zoncolan ASA

Ousdal AS

Interoil Exploration and production ASA

Andes Energia

Eitzen Chemical ASA

Team Tankers International

Cellcura ASA

Dag Dvergsten

Eltek ASA

Delta Electronics

1) Oslo Børs VPS Holding ASA listed on N-OTC 2) Bid by Nasdaq AB was not completed

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TEAM

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ARNE

BJØRN GABRIEL

TJAUM

REED

PARTNER

PARTNER

T +47 950 39 851

T +47 901 42 319

E at@bahr.no

E bgr@bahr.no

CAMILLA

CECILIE

IVERSEN

BØE

SENIOR ASSOCIATE

ASSOCIATE

T +47 474 16 277

T +47 416 60 605

E caive@bahr.no

E ceboe@bahr.no

ELISE JOHNSEN

JOAKIM RIIS

KIRKHUS

RØNNEVIG

SENIOR ASSOCIATE

ASSOCIATE

T +47 934 12 446

T +47 458 89 747

E elkir@bahr.no

E joron@bahr.no

LARS KNEM

LARS KRISTIAN

CHRISTIE

SANDE

PARTNER

PARTNER

T +47 924 95 977

T +47 908 58 464

E lkc@bahr.no

E lks@bahr.no

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ROBIN

ROLF JOHAN

BAKKEN

RINGDAL

PARTNER

PARTNER

T +47 934 09 900

T +47 400 63 333

E rba@bahr.no

E rjr@bahr.no

SIMON

SVEIN GERHARD

GUNNHEIM

SIMONNÃ&#x2020;S

ASSOCIATE

PARTNER

T +47 932 69 373

T +47 920 21 027

E sigun@bahr.no

E sgs@bahr.no

SYNNE MARIE BERGE ASSOCIATE T +47 458 72 532 E syber@bahr.no

Disclaimer This survey contains information in summary form and is therefore intended for general guidance only. It is not intended to be relied upon as legal advice or be a substitute for detailed research or the exercise of professional judgement. Please refer to your advisors for specific advice. BAHR will not accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this survey.

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