Total seduces with the acquisition of Maersk Oil, without being rewarded
“It's not too expensive. The operation allows Total to acquire assets in a market that is not yet completely valued, and helps Maersk exit an asset that was not so strategic for its activities”, says Ion-Marc Valahu, fund manager at Clairinvest.
Total’s acquisition of Maersk Oil for 7,45 Milliardo of dollars (6,3 Milliardo euros) is generally well received by the market, several managers welcoming the purchase of a quality asset, even if the title of the oil giant does not benefit on Monday on the Paris Stock Exchange.
Total announced just before the opening of European markets the acquisition of Maersk Oil, subsidiary in 100% d’A.P. Moller–Maersk, signing its largest acquisition since that of Elf Aquitaine in 2000.
The operation will notably enable the second largest French market capitalization to significantly strengthen its reserves and increase its production in the North Sea..
“It's quite a good operation. Maersk Oil has a reputation for being well managed, it’s one of the top picks’ to have in the sector”, souligne Marco Bruzzo, Deputy Managing Director of Mirabaud Asset Management, which holds Total shares in its euro zone and France equity funds.
“The acquisition does not call into question Total's dividend, which is always a sore point”, observes in particular the manager.
“With persistently low oil prices, the only option available to companies like Total is to make quality acquisitions which will impact its production volume while at the same time providing a bonus to its margins”, underlines for his part Grégoire Laverne, European equities manager at Roche Brune.
Total shares erased their losses at the start of the afternoon and traded at 42,68 euros (+0,07%) after going down to 42,28 euros in the morning, in a Parisian market in slight decline.
At the Copenhagen Stock Exchange, l’action A.P. Moller–Maersk climbs for its share of 3,5%.
Jefferies analysts say some investors may be disappointed by postponement of withdrawal of stock dividend discount.
Total indicated on Monday that it would consider proposing a stock dividend without discount after the finalization of the purchase of Maersk Oil, expected in the first quarter 2018.
Jefferies analysts rather expected this measure to be announced during Total's investor day scheduled for 25 September.
They also judge that the price paid by the oil group is high, while recognizing that there are “obvious synergies” between the portfolio of activities of the two groups.
Other managers, on the contrary, consider the amount of the transaction reasonable..
“Given the reputation and very good management of Maersk Oil, and the immediate effect of the acquisition on Total’s cash flow, the price seems attractive. Maersk Oil is a quality asset, so not very cheap, but Total did not overpay for its acquisition”, estimates Marco Bruzzo, for whom Total shares are affected by the decline in the market as a whole (-0,3% for the CAC 40).
“It's not too expensive. The operation allows Total to acquire assets in a market that is not yet completely valued, and helps Maersk exit an asset that was not so strategic for its activities”, says Ion-Marc Valahu, fund manager at Clairinvest.
Several other managers also highlight the geographic complementarity of Total with Maersk Oil, especially in the Gulf of Mexico, in Angola or even in Algeria, which should make it possible to generate synergies greater than 400 million dollars per year.
“Thanks to the planned synergies, the operation will create value fairly quickly”, observe Marco Bruzzo, at Mirabaud Asset Management.
In its press release announcing the acquisition of the Danish assets, Total indicated that the transaction would have a “immediate positive effect” on its net income per share as well as its cash flow per share. (Blandine Hénault, with Sudip Kar-Gupta, edited by Dominique Rodriguez)