Svitzer Spinoff Valued at $1.6B, Maersk Focuses on Containers

Key Takeaway

• Maersk spins off Svitzer, valued at $1.6 billion, reducing Maersk's market value by over 5% and focusing on container transport.
• Spinneys' Dubai IPO set to price at the top range, raising $375 million, indicating strong demand for private sector listings in the UAE.
• Spinneys plans expansion into Saudi Arabia, highlighting ambitious growth strategy in the Gulf region.

Maersk Spins Off Svitzer

A.P. Moller-Maersk A/S, a leading transportation giant, announced the spin-off of its towage company, Svitzer Group A/S, on Tuesday. This strategic move is anticipated to reduce Maersk's market value by more than 5%, as the company shifts its focus towards container transport both at sea and on land. Svitzer, the world's largest operator of tugboats, is valued at an enterprise value of approximately $1.6 billion, based on the average estimate from six analysts surveyed by Bloomberg News. The equity value of Svitzer is estimated to be slightly lower, at around $1.2 billion. Shareholders of Maersk are set to receive two shares of Svitzer for each share of Maersk they own, with a nominal value of 1,000 kroner ($144).

Mikkel Emil Jensen, an analyst at Sydbank A/S, highlighted the appeal of Svitzer's stock due to its stable revenue and profit growth. However, he also noted the industry's requirement for heavy investments, which could impact cash flows. Svitzer boasts a 12% share of the global market, with approximately 450 ships and 4,000 employees. CEO Kasper Nilaus expressed his intention for Svitzer to become a dividend stock in February.

Spinneys' Dubai IPO Attracts High Demand

In another significant market development, the high-end supermarket chain Spinneys' Dubai initial public offering (IPO) is set to price at the top of its range, raising 1.38 billion dirhams ($375 million). This strong demand for a rare private sector listing in the United Arab Emirates (UAE) indicates a positive outlook for regional listings. The share sale, expected to price at 1.53 dirhams per share, saw books significantly oversubscribed, with the final price announcement scheduled for May 1. The stock is expected to begin trading a week later.

The offering attracted notable investors, including Franklin Templeton as a cornerstone investor, marking a relatively rare occurrence in UAE listings where anchors have typically been local funds. The Al Seer Group LLC, the family behind Spinneys 1961 Holding plc, is selling 900 million shares, with the offering attracting immediate strong demand upon opening. This enthusiasm reflects well on the prospects for other privately-held firms considering IPOs in the Gulf nation.

Market Expansion and Strategy

Spinneys, owned by the Al Bwardy family, has a long-standing presence in the region, with its first store opening in 1961. Currently, it operates 75 supermarkets under the Spinneys, Waitrose, and Al Fair brands in the UAE and Oman. Plans for expansion into Saudi Arabia, the Gulf's largest economy, are set for this year, signaling the company's ambitious growth strategy.

The IPO is managed by Emirates NBD Capital, Bank of America Corp., and HSBC Holdings Plc as joint global coordinators, with EFG Hermes serving as a joint bookrunner. Rothschild & Co. acts as the independent financial adviser, ensuring a well-structured and strategic approach to the public offering.

Street Views

• Mikkel Emil Jensen, Sydbank A/S (Neutral on Svitzer Group A/S):

  "What might make the Svitzer stock attractive for some is that it’s a stable company with stable revenue and profit growth. But on the downside, Svitzer is in an industry where heavy investments are needed, and that will affect cash flows."

Management Quotes

• Kasper Nilaus, CEO of Svitzer:

  "The Svitzer stock might be a bit pressured in the first days of trading because many investors chose to own Maersk for the global logistics exposure and not for towage. They may then see their new Svitzer shares as a form of dividend and might choose to sell."