TDR bids for Norwegian cruise liner

A joint venture led by UK-based private equity firm TDR Capital has made a cash offer for Norwegian ferry and cruise company Hurtigruten, according to an offer announcement.

Silk Bidco, the joint venture vehicle, is owned by TDR, Home Capital, and Periscopus. Home Capital is controlled by Norwegian hotel tycoon Petter Stordalen, a member of Hurtigruten’s board of directors, while Periscopus is controlled by Trygve Hegnar, the board’s chairman.

TDR declined to comment on the offer.

Silk Bidco has offered NOK 7.00 ($1.05; £0.65) per share for 100 percent of Hurtigruten, which trades on the Oslo Stock Exchange, valuing the company at around NOK 2.94 billion ($441.7 million; £273.7 million). This represents a premium of 55.9 percent on the closing price on 28 October, and a 66.8 percent premium to the volume-weighted average share price for the previous twelve month period.

Between them the owners of the joint venture currently hold around 42 percent of Hurtigruten’s total issued share capital. If the offer is accepted, Home and Periscopus will each own five percent, with the remaining 90 percent held by TDR.

Hurtigruten’s board of directors is recommending to shareholders that they accept the offer. The offer document will be sent to shareholders following approval by the Oslo Stock Exchange, which is expected on 6 November, and the offer is expected to close on 19 December.

Silk Bidco said it intended to support the existing growth strategy of Hurtigruten, investing across the fleet to “maintain a world class experience” for passengers. The company will continue to operate from its current headquarters in Tromsø in Northern Norway.

The offer announcement states that if Silk Bidco acquires and holds a “sufficient majority” of company shares then it will apply to the Oslo Stock Exchange to de-list Hurtigruten.

TDR originally acquired 17,000,000 shares in Hurtigruten with capital from its third buyout fund, a €2 billion vehicle which closed earlier this year. It is unclear when TDR made this investment. The acquisition of the remaining shares through the joint venture will also be made with capital from TDR Capital III.

TDR also used its third fund to invest in David Lloyd Leisure last September, acquiring the European health club operator for £750 million.

Hurtigruten’s shares were up 11.14 percent Wednesday morning to NOK 4.49 ($0.67; £0.42) per share, giving the company a market capitalisation of NOK 1.89 billion ($280 million; £176 million).