Clarksons Platou Securities likes the look of an offshore wind shipping merger between Subsea 7 and OHT — and so do investors.
The Norwegian investment bank said the combination of the Kristian Siem-backed contractor’s renewables business with Arne Blystad’s Oslo-listed shipowner enables the new company — Seaway 7 — to capture a surging wind farm vessel market from 2024.
The two sides have not disclosed the exchange price used in the all-share merger.
But based on last Thursday's OHT share price of NOK 18.50 per share, Clarksons Platou head of research Turner Holm and analyst Nikolai Odegaard calculate a combined equity value of $921m.
On an enterprise value basis, the combined entity is valued at $1.3bn, with OHT assessed at $669m, including a $258m market cap, plus $6m in net debt and $405m in remaining capital expenditure (capex).
The analysts said the transaction provides a sustainable platform for growth in offshore wind installation, with 10 operational ships being brought together, and two newbuildings on order.
They view the move as positive for OHT shareholders. Clarksons Platou pointed out that the stock market seems to agree, sending the shares up 10% on Thursday.
Stronger position
"The company will be in a stronger position to compete with the largest offshore construction companies like Van Oord, Jan de Nul and DEME once the fleet is fully delivered, and in time to capture a surging offshore wind market that is expected to tighten in 2024 and beyond," the investment bank said.
OHT has a contract backlog of $150m, with Subsea 7’s renewables backlog standing at $1.8bn.
But Blystad-owned OHT currently has a financing gap of just more than $100m related to its two wind foundation and turbine installation ships being built at China Merchants Industry Holdings in China.
“This deal effectively solves this problem, in our view, as the combined entity anticipates that the future capex will be met with operating cash flow and, if required, new debt facilities that may be supported by Subsea 7,” the analysts said.
Subsea 7 chief executive John Evans said on a call with analysts on Thursday: "We have very good and strong access to the capital markets."
Clarksons Platou has a buy rating on OHT, with a target price of NOK 25 per share.
