Opera Software ASA (OPERA NO): Following a strategic review that was publicly announced on 7 August 2015, Opera Software confirmed a recommended voluntary cash offer of NOK 71 cash per share from Golden Brick Silk Road Equity Investment Fund LLP, a Shenzhen based fund that owns Chinese internet companies like Qihoo and Kunlun.
Although cash offer represents a 53% premium to last 05 February close, offer only represents meagre 2% premium to SEK 69 price on 4 August 2015, last trading day before company announced launch of a strategic review.
Tender offer is conditional on a) AGM approval of one consortium member Beijing Kunlun Tech Co of its participation in the consortium (which should be relatively straightforward as Kunlun is understood to bemajority controlled by Yahui Zhou, the spokesman behind the Consortium’s bid in today’s offer announcement PR), b) minimum 90% shareholder acceptances and c) receipt of relevant regulatory approvals. Deal is not subject to any financing or due diligence conditions. Shareholders representing approx 33% have given their irrevocables to tender their shares.
Relatively quick timetable: The offer document is expected in first half of March with tender offer period to start no later than Mar 15 for no less than three weeks (early April) and up to max of ten weeks (end May).
Although 1) slightly opportunistic pricing as NOK 71 cash offer represents hardly any hardly premium to where Opera was trading when it initiated a process to evaluate and consider strategic alternatives; 2) Opera today also announced strong 4Q15 results with strong revenue and FCF numbers, and c) Scandinavian deals typically more prone to shareholder resistance and bump pressure, we believe chance here for any required bump might be very limited here here given 1) Although largest shareholder LUDVIG LORENTZEN AS with 8.3% stake doesn’t seem to have given an irrevocable, most other largest shareholders look to have been wrapped up in the 33% irrevocable (8 out of top 9 shareholders represent about 33% of outstanding shares), and b) 2016 guidance numbers were relatively soft (with 2016 expected adj. EBITDA of USD 100-125m significantly lower than expected consensus of USD 130m).
Another Chinese outbound deal (with the customary Chinese financing headlines risk), however seems solid deal with relatively low deal conditionality and could be relatively quick 2-4 month timetable (if deal will not still require local Chinese governmental approvals). Very outside chance of bump.
However need to be compensated for a) large 30-40% downside, b) Chinese acquiror risk (and any timing delay that could be caused by any required local Chinese governmental approvals), and c) uncertainty on stance from largest 8.3% shareholder Ludvig Lorentzen AS. Would only consider this one on scares.