One more addition to my flood of messages today. Oras Invest says in its own press release that:
Oras Invest aims to become a shareholder in GF and is evaluating various options for purchasing the company’s shares within its strategy, taking into account market conditions, the general economic situation, and applicable laws, including the possibility of purchasing GF shares before and during the Tender Offer.
This strikes me as a bit concerning and potentially explains that “hostility” towards Aliaxis and from Aliaxis’s direction. According to the news, discussions with GF about a possible deal were already underway well into last year, just as they were with Aliaxis. Could it be that Oras chose its side long ago regarding where it wants to be a shareholder in the future, rather than focusing on who would offer the best price for Uponor’s shareholders?
It will be interesting to see who GF’s announced 8 million share directed issue will be targeted at—could it be Oras Invest? At today’s GF share price, that’s an issue worth approximately €500m; if the GF offer goes through, Oras will receive about €540m in gross sales proceeds from it. This might be getting into tin foil hat territory now, and hopefully it is, but surely we aren’t seeing another instance of a major owner’s backroom dealing right after Caverion?
Aliaxis already owns +20% of Uponor’s shares. Next, they will buy up Uponor shares from the market at the current share price, after which Aliaxis’s stake in Uponor will rise above the critical threshold of 30% of the total share capital. This isn’t based on any actual info. Just pondering Aliaxis’s next move…
Exactly the same observations! Completely irresponsible speculation from the sidelines: It seems the Paasikivis have no use for cash and want to stay involved in the Uponor story in the future. The doorbell started ringing, and there were several suitors, and it began to look like Uponor’s story as an independent player would not continue. For one reason or another, Aliaxis didn’t cut it as a partner (maybe they weren’t interested in Oras as an active owner), but the handsome Swiss boy Georg seems to be to their liking. At this, Aliaxis got angry and started lashing out. That 20% cornering of the market was an excellent move, but the Paasikivis and Georg are so in love that over 50% ownership is enough. This probably wasn’t about the price, given that Aliaxis was given such a cold shoulder that they couldn’t even negotiate, and only a small increase from Georg makes the offer excellent.
Let’s see how things proceed.
As a spineless paper hand, I jumped ship while the price was hovering just over €25. In hindsight, it’s easy to play “what if,” as I’ve always had trust in the Paasikivis, and their major ownership was one factor in my investment decision. The Tikkurila case was well remembered etc., but it’s another great example of investor psychology → logic says one thing, but the finger still presses the button. It didn’t turn out to be a bad investment, but some money was left on the table. Even sillier was trimming the position a while ago at a price of around €18 Lessons learned…
According to Bloomberg, there won’t be a bidding war; instead, Aliaxis is bowing out. Bloomberg is very often correct when publishing rumors of this nature, although it’s obvious that this is exactly the kind of leak you’d want to orchestrate if you were looking to snap up shares as cheaply as possible on the market (though fake leaks rarely make it through Bloomberg’s filters).
It is a bit surprising if Aliaxis really gives up this quickly, given they already have quite a lot of skin in the game. On the other hand, from a risk management standpoint, this could be very sensible if the alternative is paying a high price for a hostile, slim majority stake, after which integration and managing the company would be far from easy.
The same thought crossed my mind. And a “loophole” has been left in the announcement.
“This decision does not limit Aliaxis’s right to consider making a new tender offer for Uponor’s shares in the future. No decisions on whether or not to make a new tender offer at a later date have been made.”
I am also wondering what will happen to the dividends already promised by Uponor for the autumn. Time will tell…
Now that a week has passed since the latest developments and no flagging notifications or other interesting news have surfaced, I think I’ll try to summarize my thoughts into a prediction.
The situation is that Aliaxis would have to pay a very high price to gain majority ownership of a company that does not want to be acquired by them. From a risk management perspective, it makes no sense to attempt this, even though achieving a 50% stake would still be entirely possible for them. Oras wants Uponor in GF’s arms, which it also wants to own in the future; the Uponor board is pushing for this with dogged determination.
So now we are in a situation where Aliaxis owns over 20% of Uponor but was very likely outbid by GF. Aliaxis certainly doesn’t want to be a minority shareholder in a company majority-owned by its biggest competitor, and on the other hand, GF surely doesn’t want its biggest competitor holding a significant minority stake, along with a board seat, in a business that is important to them.
Since GF was ready to pay €28.85 for just a 50% stake, they are surely willing to pay somewhat more to gain 100% ownership. If Aliaxis agrees to sell its shares, then that 100% will be achieved with near certainty.
So, GF and Aliaxis are likely discussing the price at which Aliaxis is willing to sell its shares. Now that Aliaxis has withdrawn its own offer, the parties can presumably negotiate with each other; if both had active offers, this likely wouldn’t be practically possible according to the takeover code. Aliaxis obviously has an incentive to seek the highest possible price, which directly puts more cash in their coffers and, on the other hand, directly weakens their biggest competitor’s balance sheet, limiting their other growth investments in the near future.
Both parties likely want to get the matter settled sooner rather than later. In the coming weeks, Aliaxis’s shares will likely move to GF in the form of a block trade, and GF’s offer price will then rise to the price of this trade, which I estimate—based on pure gut feeling—to be €30.5. Since the share price is already clearly below GF’s current offer price, I think there is a quite nice risk/reward ratio on offer for a bit of “arbitrage.”
GF doesn’t need those shares to finalize the deal. I find it more likely that sometime in the distant future, GF will carve out a piece of Uponor and give it in exchange for that 20% stake.
Uponor’s profit warning was both positive and negative. The operating profit margin is rising slightly. Revenue, on the other hand, is falling. Actually, it was a bit pointless.
Are there other Uponor shareholders on the forum? The final deadline for accepting the offer is Friday, September 1, 2023. I’ve been weighing whether it’s worth selling or not. A couple of thoughts – it would be great to hear what others think. Otherwise, I wouldn’t even consider not selling, but since my purchase price is from the corona lows, there would be a significant amount of tax to pay in the event of a sale.
The buyer wants 50% of the shares for the tender offer to go through. It’ll likely sail through since the major shareholders are selling.
Is it pleasant to be a minority shareholder when one party owns over 50%, maybe 70-80% of the company? What will the share price development be like once the tender offer ends? On the other hand, one might think they’ll gradually buy more shares from the market, but at what price?
The financial ratios are quite high (P/E 25, P/B 4.5 etc.) as the share price has reached 28.85 euros following the tender offer. There are cheaper targets available on the stock market at the moment.
The offer period was extended today until October 31; regulatory approvals have not yet been received from the EU. This was indeed anticipated in the original schedule estimate, as closing was expected during Q4, which still holds true.
Today’s real news was that, according to the release, GF already owns ~9.5% of Uponor’s share capital. This explains why the share price doesn’t seem to drop below the offer price; GF is providing support in the market.
Someone else besides GF also seems to be accumulating this, as larger blocks like the one in today’s closing auction occasionally move at prices above the offer price.
I’m sticking to my previous prediction that Aliaxis’s shares will be transferred to GF, and in that context, the offer price will be moderately raised. With this, GF will then reach +90% ownership and can proceed with the squeeze-out. This will likely only happen once all regulatory approvals are finalized and the deal can be fully completed. Until then, it’s probably worth holding on to your shares, even though you can already get slightly more than the current offer price on the market.
Amateur speculation.. are there any antitrust requirements that could cause the entire offer to be cancelled? Or use them as a reason to withdraw? I don’t know how construction is developing in Uponor’s other markets, but the Scandinavian region is likely to be quite weak in the coming years?
Now we’re just waiting to see what Aliaxis does with its shares now that there are no longer any uncertainties regarding the completion of GF’s offer. GF wants to buy them, and it’s unlikely Aliaxis wants to leave such a minority stake hanging on its balance sheet. It will be interesting to see if they can agree on a price. Fortunately, we won’t have to wait much longer, as GF’s offer is set to go through as it stands at the beginning of November.
Lessons learned…