OEM International, a leading technical trading group in Sweden, is facing a significant drop of 5% in its stock price on the Stockholm Stock Exchange, currently trading at 119 kronor per share. This decline comes as a surprise, especially considering EQT’s bid of 110 kronor per share, which was believed to be a fair offer.
Joel Backesten, a fund manager at Danske Bank, expressed his disappointment with the bid, stating that it significantly undervalues OEM International. The bid represents a negative premium of 12.3% compared to the previous day’s closing price, valuing the company at 15.25 billion kronor.
Despite the current major shareholders, Orvaus, Siv Franzén, Agne Svenberg, and investment company Traction, who collectively hold 72.5% of the voting rights and 25.7% of the capital, committing to accepting EQT’s offer, it is clear that OEM International will remain listed on the stock exchange. Traction has announced its intention to hold approximately 1.8 million B-shares in OEM after the completion of the offer.
“I will definitely not sell. EQT’s entry brings some uncertainty, but it also presents an opportunity for OEM to leverage its balance sheet and engage in acquisitions,” said Joel Backesten. While OEM International is not one of the largest holdings in his fund, Sweden Small Cap Class SA, it still accounts for 2.71% of the portfolio.
OEM International is currently trading at a significant discount compared to other technology traders. Backesten attributes this to the company’s conservative approach to acquisitions compared to competitors like Lagerkranz and Addtech. With EQT as the new majority owner, he believes that OEM’s acquisition strategy is likely to become more aggressive.
“If that happens, you have a company with the best organic growth compared to other technology and industrial traders that also becomes more acquisitive. The key is not to rush and buy the wrong things. But it will be very interesting to see how much they can ramp it up,” Backesten stated.
Lannebo, holding 3.76% of the votes and 10.7% of the capital, is the third-largest shareholder in OEM International. The asset manager has not disclosed its stance on EQT’s bid.
In conclusion, the future of OEM International remains uncertain as EQT’s bid creates both challenges and opportunities for the company. With a potential shift towards a more aggressive acquisition strategy, investors and industry analysts are closely watching to see how OEM International will navigate this new chapter in its journey.