The Finnish Trade Bank analyst Karri Rinta at Handelsbanken writes in a new report called “Consolidation Catalysts” that Finnish paper giant Stora Enso make a bid on its Norwegian competitor, Norske Skog, and strike a deal with UPM-Kymmene Stora that would replace the current pool of magazine paper with selected newspaper assets of UPM.
“It’s a golden opportunity”
The share price of the world’s second largest producer of news print paper surged 16,6% Thursday after Handelsbanken released it’s latest research report “Consolidation Catalysts.” The report predicts a big consolidation among the Nordic paper producers, and says it is a “golden opportunity” for investors.
The rise came largely as a direct result of a report written by the Finnish Trade Bank analyst Karri Rinta, entitled “Consolidation Catalysts.”
Analyst Karri Rinta raise his recommendation for the Norwegian paper producer to “buy” from “reduce,” and predicts an acquisition of the Norske Skog ASA – one of Norway‘s industrial icons.
“We believe that Stora Enso will offer, and strike, an agreement with Norske Skog, and make a deal with UPM-Kymmene to swap a pool of Norske Skog/Stora Enzo magazine paper with a selected UPM newspaper properties,” Rinta writes.
He describe a potential acquisition of Norske Skog as a “golden opportunity” for investors.
Norske Skog, founded in 1962, has been a cornerstone of Norwegian industry for decades. In the last couple of years, however, the company have been hunted by rising borrowing costs, shrinking value of the dollar and destabilizing turbulence within the management.
Another Lousy Report
Norske Skog reported gross operating earnings (EBITDA) of NOK 275 million in the first quarter of 2010, Thursday, down from NOK 472 million in the previous quarter and NOK 504 million in the first quarter of 2009.
Share Price May Double
According to Handelsbanken’s reviews, the value of Norske Skog is 10.73 billion.
The company’s market value stands at the moment at only 1,55 billion. (Closing price at OSE, Thursday),
Analyst expect a premium of 110 percent – a potential bid of NOK 15.
The NSG’s shares jumped from NOK 7,40 to NOK 8,36 today.
“With margins back at 90 percent, and each paper grade controlled by an unconquered “Grade Master”, the paper prices should see significant increase in the long term”, according to another report from the Handelsbanken ASA.
Norske Skog also informs the market that the company today sold 289.631 shares to employees in connection with the annual share savings scheme.
Company executives bought around 20.000 shares at the price of NOK 7,48.
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