NORSK HYDRO (NHY) ISIN NO0005052605
3,153 EUR
-0,06% | -0,00
21/11/2013 13:57
-0,06% | -0,00
21/11/2013 13:57
Vale Seeks To Sell Its Entire Stake In Norsk Hydro As Part Of Divestment Program
November 20th, 2013 by Trefis Team
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Vale (NYSE:VALE) has managed to sell nearly all of its 22% stake in the Norwegian aluminum producing company Norsk Hydro ASA. The company had offered to sell as many as 407 million shares in Norsk Hydro in an offering, and as many as 40.7 million additional shares via an over-allotment option. While all of the 407 million shares have already been sold for $1.66 billion, if the over-allotment option is exercised in full, Vale will have managed to dispose of its entire 22% stake in Norsk Hydro for $1.8 billion. [1]
Vale’s decision to sell its stake in Norsk Hydro is part of its strategy to get rid of non-core assets in order to reduce future capital expenditure on them and instead concentrate on its core operations.
We have a Trefis price estimate for Vale of $17, which represents a 10% upside to the current market price. We will be updating our price estimate shortly in view of the third quarter results.
See Full Analysis of Vale Here
Vale’s Stake In Norsk Hydro
Vale had acquired a 22% stake in Norsk Hydro and a seat on its board in early 2011 after selling some of its bauxite and alumina assets in Brazil to the company. Vale received $1.08 billion in cash, a 22% stake in Norsk Hydro and a seat on its board. Including assumed net debt, the deal was valued at $5.27 billion at the time. The 22% stake alone was valued at $3.53 billion at a share price of 44.63 kroner.
Since then, the value of Norsk Hydro’s shares has fallen by 40% and Vale has been forced to write down the value of its investment in the company. Vale recorded an impairment of $975 million on its investment in Norsk Hydro in Q4 2012. The price of each Norsk Hydro share under the latest offering is 25 kroner, which represents a slight premium to its current book value in Vale’s accounts. While Vale has wanted to sell its Norsk Hydro stake for about a year now, it had been waiting for the share value to appreciate. This has not happened, largely because aluminum producers the world over are struggling due to low prices and rising costs. [2]
Why Vale Is Selling Stake
The latest stake sale is part of Vale’s divestment program. The company is selling assets that are not part of its core businesses of iron ore, copper, nickel, coal and fertilizers. Prior to the Norsk Hydro stake sale, Vale sold 36% of its stake in the logistics company VLI for $1.2 billion and is in talks to sell another 26%. The money raised from selling non-core assets is intended to be used for investment in future growth projects such as the S11D iron ore project in Brazil and the Mozambican coal operations. [3]
Another immediate reason for the timing of the Norsk Hydro stake sale could be the need to have enough cash on hand to deal with an adverse ruling in the ongoing protracted tax dispute with the Brazilian government. The government claims that Vale owes it 30.5 billion Reals in taxes while Vale has always denied it. The two sides may come to a possible tax settlement, under which Vale may be asked to pay 20% of the amount as downpayment. Paying this amount in cash would deplete the company’s cash base unless it makes alternative arrangements such as through stake sales.
Vale’s decision to sell its stake in Norsk Hydro is part of its strategy to get rid of non-core assets in order to reduce future capital expenditure on them and instead concentrate on its core operations.
We have a Trefis price estimate for Vale of $17, which represents a 10% upside to the current market price. We will be updating our price estimate shortly in view of the third quarter results.
See Full Analysis of Vale Here
Vale had acquired a 22% stake in Norsk Hydro and a seat on its board in early 2011 after selling some of its bauxite and alumina assets in Brazil to the company. Vale received $1.08 billion in cash, a 22% stake in Norsk Hydro and a seat on its board. Including assumed net debt, the deal was valued at $5.27 billion at the time. The 22% stake alone was valued at $3.53 billion at a share price of 44.63 kroner.
Since then, the value of Norsk Hydro’s shares has fallen by 40% and Vale has been forced to write down the value of its investment in the company. Vale recorded an impairment of $975 million on its investment in Norsk Hydro in Q4 2012. The price of each Norsk Hydro share under the latest offering is 25 kroner, which represents a slight premium to its current book value in Vale’s accounts. While Vale has wanted to sell its Norsk Hydro stake for about a year now, it had been waiting for the share value to appreciate. This has not happened, largely because aluminum producers the world over are struggling due to low prices and rising costs. [2]
Why Vale Is Selling Stake
The latest stake sale is part of Vale’s divestment program. The company is selling assets that are not part of its core businesses of iron ore, copper, nickel, coal and fertilizers. Prior to the Norsk Hydro stake sale, Vale sold 36% of its stake in the logistics company VLI for $1.2 billion and is in talks to sell another 26%. The money raised from selling non-core assets is intended to be used for investment in future growth projects such as the S11D iron ore project in Brazil and the Mozambican coal operations. [3]
Another immediate reason for the timing of the Norsk Hydro stake sale could be the need to have enough cash on hand to deal with an adverse ruling in the ongoing protracted tax dispute with the Brazilian government. The government claims that Vale owes it 30.5 billion Reals in taxes while Vale has always denied it. The two sides may come to a possible tax settlement, under which Vale may be asked to pay 20% of the amount as downpayment. Paying this amount in cash would deplete the company’s cash base unless it makes alternative arrangements such as through stake sales.
About the company
| 94.72bn | 8.06bn | 1905 | 18.89k | |||
| Revenue in NOK (TTM) | Net income in NOK | Founded | Employees |
|---|
Norsk Hydro ASA is a Norway-based aluminium company engaged in all activities along the aluminium industry's value chain. The Company's business is divided into five operating segments. Primary Metal consists of aluminium production, remelting and casting activities. Metal Markets includes sales and distribution activities relating to products from metal plants, metal sourcing and trading activities. Rolled Products segment comprises operations of the Company's rolling mills. Extruded Products focuses on delivering solutions to the building and construction, transportation, and engineered products industries and includes aluminium building systems and precision tubing activities. Energy is responsible for managing the Company's captive hydropower production and external power sourcing arrangements to the aluminium business. Norsk Hydro ASA operates in 40 countries and has 11 wholly or partly owned metal production facilities in Europe, Canada, Australia and Qatar.
Market figures
Main shareholders
The Norwegian State is represented by the Ministry of Trade and Industry (Nærings- og handelsdepartementet)
NORSK HYDRO FIGURE PARMI LES 1ERS PRODUCTEURS MONDIAUX D'ALUMINIUM ET D'ENERGIE
Le CA par activite se repartit comme suit :
- production et raffinage d'aluminium (55,5%) : aluminium de base (2,4 Mt vendues en 2009) et alumine ;- fabrication de produits en aluminium (41,2%) : notamment aluminium profile, produits d'aluminium lamine, metaux de construction et composants automobiles ;
- production et distribution d'energie (2,5%): electricite (2e producteur norvegien) et energie hydroelectrique ;
- autres (0,8%) : notamment production de produits en PVC.
La repartition geographique du CA est la suivante : Allemagne (18,5%), Grande Bretagne (7,4%), France (7,3%), Suisse (7,2%), Italie (7%), Espagne (6%), Europe (21,7%), Etats-Unis (9,1%) et autres (15,8%).
| DIRIGEANTS | |
|---|---|
| Svein Richard Brandtzaeg | President Directeur General |
| Jorgen C Arentz Rostrup | Finances |
| Stian Hasle | Contact Investisseurs |
| PRINCIPAUX ACTIONNAIRES | |
|---|---|
| Etat Norvegien | 43,82% |
| Folketrygdfondet | 5,24% |
| State Street Bank and Trust Company | 4,65% |
| Morgan Guaranty Trust Company of New York | 4,53% |
| Hydro | 3,34% |
| Mellon Bank | 1,28% |
| Clearstream Banking | 1,25% |
| JP Morgan Chase | 1,16% |
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