Bloomberg News

Fornebu Surges as OBOS Pays 46% Premium for Control: Oslo Mover

February 01, 2012

Jan. 31 (Bloomberg) -- Fornebu Utvikling ASA rose the most on record in Oslo trading after Oslo Bolig- og Sparelag bought shares at a 46 percent premium to gain control of the developer of Norway’s largest housing project.

Fornebu shares rose as much as 46 percent, the most since its 2007 listing, and were up 45 percent at 2.44 kroner at 4:25 p.m. local time. The shares dropped 28 percent last year, after rising 50 percent in 2010. The shares were bought from Orkla ASA as well as Norwegian billionaire Stein Erik Hagen.

OBOS, a cooperative building association owned by its members, in transactions yesterday and today agreed to buy 598 million shares at an average price of 2.44 kroner to 2.45 kroner, raising its stake to 90 percent. That was a 46 percent premium above yesterday’s close, valuing the company at 2 billion kroner ($340 million).

“It’s a very attractive land bank that Fornebu Utvikling has, but I don’t believe they have the organization backing it to really develop the properties at the speed needed,” Andreas Strand, an Oslo-based analyst at ABG Sundal Collier Holding ASA said by phone. “OBOS will be able to do that.”

Fornebu Utvikling, which is developing the project on the site of Oslo’s former airport, said in its third-quarter report that had completed a financial restructuring and had a “solid” financial platform. The company’s third-quarter loss narrowed to 32.5 million kroner from 113.6 million kroner a year earlier.

Of 28 real estate company acquisitions tracked by Bloomberg in western Europe so far this year, the acquirer has paid an average premium of 47 percent.

According to Strand, OBOS is paying 9,000 kroner a square meter (10.8 square feet), which he said is “a pretty good price.” Simen Mortensen, an analyst at DNB Markets, estimates OBOS paid about 9,160 kroner per square meter, he said by phone.

OBOS manages and develops real estate properties and manages more than a third of all residential real estate in Oslo, according to its website.

“This gives OBOS members an increased supply of attractive housing in Oslo’s finest residential area,” Martin Maeland, chief executive officer of OBOS, said in a statement. “We consider Fornebu development as a long-term investment and want to work closely with current management in Fornebu Development to help the company to achieve its long-term goal.”

Orkla, which is selling assets to focus on its consumer brands business, sold its 32 percent stake, while Canica AS, the investment company of Orkla Chairman Hagen, sold its 5.97 percent stake. In addition, funds managed by QVT Financial LP sold 163 million shares, or 19.6 percent of the shares.

--With assistance by Stephen Treloar in Oslo. Editor: Jonas Bergman, Christian Wienberg

To contact the reporter on this story: Meera Bhatia in Oslo at mbhatia2@bloomberg.net

To contact the editors responsible for this story: Christian Wienberg at cwienberg@bloomberg.net


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