Chicago, Illinois, U.SA.-heaquartered technology solutions provider John Bean Technologies Corporation (JBT) has made a second attempt to acquire Gardabaer, Iceland-based processing equipment manufacturer Marel.
Marel nixed a takeover bid from JBT in late November after the company’s board of directors determined the proposal was not in the best interest of the companies shareholders. The board said that the initial offer, which was reportedly for EUR 3.15 (USD 3.43) per share, did not account for the intrinsic value of the company.
Now, JBT has launched a second attempt to purchase Marel, this time offering EUR 3.40 (USD 3.71) per share – 8 percent higher than it offered on 24 November. The updated offer implies an enterprise value of roughly EUR 3.4 billion (USD 3.7 billion) for Marel, and as before, JBT has received an irrevocable undertaking with respect to the shares owned by Eyrir Invest, which holds 24.7 percent of the shares in Marel.
“JBT has long admired Marel, and there is significant strategic, cultural, and operational alignment between the companies. We are confident that the contemplated merger would bring substantial benefits to both companies’ customers, employees, local communities, partners and shareholders,” JBT President and CEO Brian Deck said in a release.
Marel said it has engaged J.P. Morgan as its financial advisor, and Baker McKenzie, BBA/Fjeldco and Osborne Clarke for legal advice on the new proposal. The company added in a release that it will review it “with due care and process to assess its merits” and will update the market regarding any further material developments on the offer.
The day that JBT announced its bid, Marel’s share price jumped from ISK 438 (USD 3.17, EUR 2.91) to ISK 470 (USD 3.40, EUR 3.12), and as of market close on Friday the price settled at ISK 462 (USD 3.34, EUR 3.06).
JBT said that as part of the offer, it would “contemplate” keeping Marel’s stock exchange listing on the New York Stock Exchange, with a secondary listing in Reykjavik. It would also provide proportional representation for the company on its board of directors, and maintain the company’s European headquarters in Gardabaer, Iceland.
Marel’s board of directors received heavy criticism from some of its shareholders soon after it rejected the first takeover bid. Teleios Capital Partners, which owns a 3.3 percent stake in the Icelandic company, publicly called out the company’s leadership and said the company’s potential “has been stifled by a beleaguered ownership structure and system of governance that do not befit an enterprise of its size and pedigree.”
Teleios claimed that Eyrir Invest’s role in the takeover bid is problematic, as it is a holding company that was – until this year – under the control of former Marel CEO Arni Oddur Thordarson and his father, Thordur Magnusson. Teleios said Thorsdarson was “recently deposed” from his role as CEO, and rumors in Iceland are that his “imprudent stewardship and financial decision-making” left Eyrir in dire financial straits.
Teleios said that situation may have led Thordarson to push for a deal to shore up his own financial position.
“It is our belief that the takeover offer sought to capitalize on the current vulnerability of both Marel and Eyrir, and acquire Marel at a depressed valuation in just this way, which is why we support the board’s rejection of it,” Teleios said.
JBT’s takeover bid came at a relative low point for Marel's stock price, with shares hitting ISK 327 (USD 2.36, EUR 2.17). However as recently as April, the company’s stock price had risen to ISK 584 (USD 4.23, EUR 3.88), much higher than JBT’s initial and subsequent offers, and that figure is itself lower than the above ISK 800 (USD 5.79, EUR 5.31) the share price held for much of 2021.
The current nadir, coupled with what Teleios called “questionable decision-making and inaction,” led it to write the letter suggesting a lack of confidence in the board’s ability to manage the company.
“Marel’s shares traded at all-time lows in the weeks prior to the bid announcement, its CEO of 10 years was abruptly exited three weeks ago amidst widespread doubts as to his credibility, and its largest minority shareholder remains a source of worrying uncertainty,” Teleios Capital said.
The proposal came just over one month after Marel released its Q3 2023 results, which indicated its revenue, adjusted earnings before interest and taxes (EBIT), orders received, and order book were all down year over year.
JBT Corporation, meanwhile, said that a partnership between the two companies would be mutually beneficial to both given JBT’s presence in the market, and that it is open to continued dialogue with Marel’s board of directors.
“Together, our companies would be best positioned to meaningfully help customers create efficient, higher quality end products with a combined focus on sustainable solutions that make better use of the world’s precious food, beverage, water, and energy resources,” Deck said. “JBT remains open to further dialogue with the board of Marel to design a win-win outcome.”
Photo courtesy of Marel
