Arnhold LLC Challenges Ocean Wilsons Merger Proposal to Protect Value
Concerns Over the Proposed Merger of Ocean Wilsons Holdings Limited
Arnhold LLC, an investment manager with significant holdings in Ocean Wilsons Holdings Limited, has voiced strong objections to the proposed all-share combination with Hansa Investment Company. The firm believes that this merger, termed the 'Combination,' poses a grave risk to the interests of Ocean Wilsons' public shareholders.
Key Issues Identified with the Merger Plan
In an open letter directed to fellow shareholders, Arnhold highlights several critical concerns regarding the fairness and logic behind the Combination. Notably, the planned merger is seen as deeply flawed, with inadequate compensation for shareholders. Arnhold emphasizes that the valuation reflected in the merger proposal does not accurately capture the strengths and contributions of both companies.
A Call to Vote
Arnhold plans to oppose the Combination at the upcoming Scheme Meeting. They urge other shareholders to join in this resistance, stressing that a unified vote against the merger is crucial to protect shareholder value.
Financial Evaluation and Stake Analysis
Arnhold's analysis suggests that the Combination might significantly undervalue Ocean Wilsons' shares. Current calculations point to a discrepancy, with Ocean Wilsons' net asset value (NAV) exceeding £20 per share, whereas shareholders would only receive approximately £12 in shares of Hansa. This is seen as an unacceptable bargain for the shareholders of Ocean Wilsons.
Concerns about Calculations
The firm challenges the fairness of the calculations involved in the merger. They argue that it does not consider the differing compositions of the investment portfolios of Ocean Wilsons and Hansa, which presents a misleading view of their overall value. For instance, Ocean Wilsons holds around US$449 million in cash, constituting approximately 58% of its NAV, contrasting sharply with Hansa's lower cash percentage.
Argument Against Majority Stake Inflation
Arnhold raises concerns regarding the perceived inflation of Hansa’s stake in Ocean Wilsons for the merger assessment. They argue that the valuation of Hansa's shares has been artificially increased, which affects the overall assessment of the Combination, ensuring Ocean Wilsons shareholders are receiving less value than deserved.
Market Reactions and Their Implications
Market reactions following the announcement have been telling. Ocean Wilsons’ share prices have declined, reflecting widespread investor discontent regarding the forthcoming Combination. In contrast, Hansa's share price has witnessed an increase, suggesting investor confidence in their position at the expense of Ocean Wilsons' shareholders.
Proposed Alternatives to the Combination
Arnhold firmly believes there are more favorable alternatives than the proposed merger. One suggestion includes returning cash to shareholders from recent gains achieved through the sale of Ocean Wilsons' ports business. This could allow for substantial dividends that would benefit shareholders, unlike the current merger proposal.
A Future without the Combination
Additionally, Arnhold proposes that Ocean Wilsons consider continuing its operational path without merging. The firm asserts that this strategy would allow them to retain and grow the value of their assets independently. Ocean Wilsons has expressed confidence in its prospects as a standalone entity, which aligns with Arnhold's sentiment on maximizing direct shareholder value.
Conclusion and Call to Action
In summary, Arnhold LLC articulates profound concerns regarding the proposed merger, viewing it as an underwhelming solution that fails to serve the best interests of Ocean Wilsons’ shareholders. They urge stakeholders to vote against the Combination at the upcoming Scheme Meeting, actively encouraging communication among shareholders to form a united front against decisions that could decimate shareholder value.
Frequently Asked Questions
What is the main concern regarding the proposed merger?
The primary concern is that the merger undervalues Ocean Wilsons' shares, posing a potential loss in shareholder value.
What action is Arnhold LLC planning to take?
Arnhold intends to vote against the merger and is urging other shareholders to do the same to protect their investments.
How does Arnhold propose to enhance shareholder value?
Arnhold suggests alternatives that include cash distributions from the sale of assets rather than proceeding with the merger.
What financial metrics are concerning?
Arnhold points out that Ocean Wilsons' NAV is significantly higher than what shareholders would receive in the merger.
What are the implications of the market reaction?
The negative market reaction indicates that investors are skeptical about the merger's benefits, especially for Ocean Wilsons' shareholders.
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