#USA #New York #Arnhold LLC #Ocean Wilsons #Hansa Investment

Arnhold LLC Issues Open Letter to Ocean Wilsons Shareholders

On August 25, 2025, Arnhold LLC, a prominent investment manager, publicly expressed its disapproval of the proposed merger between Ocean Wilsons Holdings Limited and Hansa Investment Company Limited. In an open letter addressed to fellow shareholders of Ocean Wilsons, Arnhold articulated several concerns that underscore their intent to vote against the Combination at the upcoming Scheme Meeting scheduled for September 12, 2025.

Overview of the Concerns

Arnhold’s primary argument is that the merger, framed as an all-share combination, is inherently flawed and could significantly undermine the financial value for Ocean Wilsons' shareholders. They contend that the proposed terms do not accurately reflect the individual contributions of each entity involved in the merger. Furthermore, Arnhold assesses that the offered valuation is unacceptably low and does not represent the true worth of Ocean Wilsons, which is currently estimated to have a net asset value (NAV) exceeding £20 per share.

The group estimates the merger would lead Ocean Wilsons shareholders to receive shares valued at around £12, marking approximately a 40% discount based on their current NAV. This disparity highlights what Arnhold considers a blatant undervaluing of the Ocean Wilsons shares, raising questions about the fairness of the transaction.

Financial Implications of the Merger

The proposed merger structure, described as a NAV-for-NAV transaction, has raised eyebrows at Arnhold. They believe it fails to account for the different structures of the investment portfolios of both companies. Ocean Wilsons boasts around $449 million in cash and cash equivalents, which constitutes about 58% of its NAV, while Hansa’s portfolio holds only 3.4% in liquid assets. This fundamental mismatch presents a serious concern in evaluating the merits of the proposed exchange ratio that determines how much Ocean Wilsons shareholders would receive in Hansa shares.

Arnhold's analysis suggests that converting each dollar of Ocean Wilsons’ cash to shares in Hansa would result in a significant undervaluation, likely trading for only 60-65 cents of actual value. They argue that such a scenario would be detrimental to existing shareholders.

Value Discrepancy and Shareholder Interests

Furthermore, Arnhold asserts that Hansa has potentially inflated its stake in Ocean Wilsons in the context of this merger, exaggerating its actual market value and skewing the transaction's calculations. The letter notes that while Hansa's stock price has surged due to this proposed merger, Ocean Wilsons' share prices have declined, indicating market skepticism regarding the fairness of the merger.

Arnhold also highlights the conflict of interest posed by certain shareholders involved in the merger negotiations, particularly individuals with significant stakes in both companies. This potential disparity in interest raises alarms about whether all shareholders can expect equitable treatment in the merger.

Alternative Solutions Proposed

Rather than pursuing the merger, Arnhold suggests alternatives that could yield more favorable outcomes for shareholders. They propose distributing Ocean Wilsons' substantial cash holdings directly to shareholders, which could enhance shareholder value and offer a better financial solution than the contentious merger. A cash dividend could result in nearly £11.75 per share for shareholders, allowing them to retain a more significant stake in the asset value of the company while the remainder remains invested.

Arnhold also emphasizes the importance of the shareholders' votes in determining the future of Ocean Wilsons. They encourage all shareholders to consider their investments carefully before voting on the Combination, as this decision has far-reaching implications on the company's value and longevity in the market.

Conclusion

As the Scheme Meeting on September 12 approaches, the open letter from Arnhold LLC serves as a rallying call for Ocean Wilsons shareholders to critically assess the proposed merger with Hansa Investment Company. With significant concerns regarding fairness, valuation, and potential conflicts of interest, Arnhold remains committed to opposing a merger that they believe could lead to substantial losses and diminished value for shareholders of Ocean Wilsons. It is imperative that shareholders make informed decisions about the future of their investments in the face of this controversial proposal.