Here is the upcoming spinoff timetable released by the company:
| Date | |
| Publication of demerger plan and demerger statement as well as notice convening the annual general meeting of APMM | 4 March 2019 |
| Annual general meeting of APMM | 2 April 2019 |
| Cut-off date (last trading day for APMM shares including the company’s drilling activities) | 3 April 2019 at 5.00 p.m. |
| First trading day for the shares of The Drilling Company of 1972 | 4 April 2019 |
| Record date (the time of specification of the APMM shareholders that are to receive shares in The Drilling Company of 1972 in connection with the demerger) | 5 April 2019 at 5.59 p.m. |
| Contribution of shares of The Drilling Company of 1972 in VP Securities to receiving shareholders | 8 April 2019 |
The first steps have already been completed and there is no reason to think the company will encounter any resistance at the AGM in early April. One byproduct of the spinoff is that the new company will only have a single share structure when it trades on the Nasdaq Copenhagen. In order to create that ‘every A or B share in APMM of nominally DKK 1,000 will receive 2 new shares of nominally DKK 10 and every A or B share of APMM of nominally DKK 500 will receive 1 new share of nominally DKK 10’. Based on the schedule, it looks like shareholders will actually receive their shares in the company in the days following the company beginning trading.
The transaction represents one of the final steps in Maersk’s transformation that began several years ago. The goal is to convert the company into a pure transportation company and in the meantime it sold off Maersk Oil to Total and Maersk Tankers to AP Moller Holdings. After the spinoff, the last step is to find something to do with Maersk Supply Services. Pretty impressive. As part of the shift, the shipping giant is embracing new technology and was one of the first adopters of blockchain technology. The company partnered with IBM, but unfortunately, their venture hasn’t had much success to date.
Chris Mayer, author of 100 Baggers, is a big fan of AP Moller Maersk though and believes it’s the right time to place this contrarian bet in a loathed industry. It’s a long piece that is worth reading in its entirety, but in short, he thinks the company is well run and reasonably cheap for this stage of the cycle:
Maersk’s guidance calls for $5 billion in EBITDA in 2019. It could generate over $2 billion in free cash flow in 2019 from transportation assets alone. Stripping out the energy assets leaves the stock trading for ~10x free cash flow. Seems cheap to me for a company somewhere around the bottom of its cycle.
Of course, there are risks including changing regulations and threats surrounding global trade. Although he recognizes the risks, he thinks that:
…the risk to the downside here is fairly low. We own a well-financed conglomerate with hard to replace assets in shipping and logistics. We have lots of catalysts on the horizon in the form of a spinoff, possible special dividends and/or buybacks. We own a firm managed by a family with a lot of skin in the game (they own about half the shares). And we’re picking these assets up near the bottom of a shipping cycle.
The last point regarding the family is worth noting. The family, through its A.P. Møller Holdings, owns ~41.5% of AP Moller Maersk and has agreed to a 360 day lockup period for its shares in The Drilling Company of 1972 spinoff. It’s rare to see a family company decide to undergo such a radical transformation and focus on delivering value to shareholders. Time will tell if the end results were worth it.
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