Dutch animal nutrition and fish feed specialist Nutreco NV is fattening up its defenses against unwanted suitors Cargill Inc. and Permira in favor of a €3 billion ($3.7 billion) agreed offer from SHV NV, a closely held Dutch investment firm.
Nutreco confirmed on Monday, Dec. 1, that it plans to add Bank of America Merrill Lynch and Skadden, Arps, Slate, Meagher & Flom LLP to an adviser group including ING Corporate Finance and Dutch law firm De Brauw Blackstone Westbroek.
"Following the approach by Cargill, the boards have decided to add BAML and Skadden to their team of advisers in order to have extra insight in and understanding of the U.S. perspective," said Nutreco spokesman Mark Woldberg.
The development comes less than a month after SHV raised its recommended bid to €44 a share, after Nutreco rejected a breakup proposal from Cargill and Permira that Nutreco estimates to be worth €43.20 a share. It also comes amid widespread expectations that Cargill will up the ante with a higher offer.
"This story has not ended yet," wrote analyst Gerard Rijk of SNS Securities in a Monday note. "The fact that Nutreco is hiring two additional advisers shows that Cargill's interest is not over."
Adding Nutreco's world-leading fish feed business "is by far the best opportunity for Cargill to strengthen its position and become the global market leader for the next decade in this potentially high-growth market," he said, predicting that Cargill may divest assets in the U.K. and the Netherlands where there are overlaps if its bid succeeds.
The analyst left his buy rating on Nutreco unchanged, with a target price of €50.
Nutreco shares down marginally on Monday afternoon in Amsterdam at just below €45.69, putting its market capitalization at around €3.2 billion.
Nutreco also announced on Monday that it had acquired two companies in Brazil, the world's third-largest animal nutrition market: Fatec Indústria de Nutrição e Saúde Ltda., which makes premixes and animal health products for poultry, pigs and cows, and BRNOva Sistemas Nutricionais SA, a poultry and swine specialist. The two companies have combined sales of €75 million, Nutreco said.
Both will become part of Nutreco Brazil, whose pro forma 2014 revenue will amount to about €185 million following the acquisitions.
Amersfoort-based Nutreco, whose roots go back to 1899, changed its focus in 2005 from feed, farming and meat processing to animal nutrition and fish feed. It employs about 10,000 people in more than 30 countries. It reported revenue of €5.2 billion in 2013.
Closely held SHV, founded in 1896 from the merger of several large coal trading companies, is active today in oil and gas exploration through a stake in Dutch joint venture investor Dyas. It also holds stakes in the South American arm of cash and carry wholesaler Makro and Dutch buyout shop NPM Capital. SHV posted €17.6 billion in 2013 revenue.
NG Bank NV and Leonardo & Co. issued fairness opinions to Nutreco's executive and supervisory boards, respectively, on SHV's original offer.
SHV is taking advice from Lazard and Allen & Overy LLP, with Bain & Co. advising on strategy and Deloitte LLP on tax and financial due diligence.