IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hochtief-ag" target="_blank" data-smartkarma-citation="entities:21652:1" rel="noopener">Hochtief AG (HOT GR)</a> announced an unconditional off-market takeover offer for <a href="https://www.smartkarma.com/entities/cimic-group-ltd" target="_blank" data-smartkarma-citation="entities:20030:1" rel="noopener">CIMIC Group Ltd (CIM AU)</a> at A$22.00 cash per share, a 33.4% premium to the last close price. </li>
<li>The offer’s implied forward EV/EBITDA multiple is at a discount to peer multiples. However, the offer is attractive compared to historical and transaction multiples.  </li>
<li>The offer presents a reasonable exit for minorities tired of the weak share price due to years of troubled contracts.</li>
</ul>



Hochtief AG (HOT GR) announced an unconditional off-market takeover offer for CIMIC Group Ltd (CIM AU) at A$22.00 cash per share, a 33.4% premium to the last close price. 
The offer’s implied forward EV/EBITDA multiple is at a discount to peer multiples. However, the offer is attractive compared to historical and transaction multiples.  
The offer presents a reasonable exit for minorities tired of the weak share price due to years of troubled contracts.


CIMIC in an Off-Market Takeover Bid by Hochtief

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hochtief-ag" target="_blank" data-smartkarma-citation="entities:21652:1" rel="noopener">Hochtief AG (HOT GR)</a> has finally launched an unconditional offer for the rest of <a href="https://www.smartkarma.com/entities/cimic-group-ltd" target="_blank" data-smartkarma-citation="entities:20030:1" rel="noopener">CIMIC Group Ltd (CIM AU)</a> (where it already owns 78.58%).</li>
<li>As <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> writes in <a href="https://www.smartkarma.com/insights/hochtief-s-unconditional-offer-for-cimic" target="_blank" data-smartkarma-citation="insights:65774" rel="noopener">Hochtief's Unconditional Offer For CIMIC</a>, this should be a done deal. Completion would free up a place in the S&amp;P/ASX200.  </li>
<li>This looks to be one of the earlier Q2 intra-quarter changes, but there are technicalities.</li>
</ul>



Hochtief AG (HOT GR) has finally launched an unconditional offer for the rest of CIMIC Group Ltd (CIM AU) (where it already owns 78.58%).
As David Blennerhassett writes in Hochtief's Unconditional Offer For CIMIC, this should be a done deal. Completion would free up a place in the S&amp;P/ASX200.  
This looks to be one of the earlier Q2 intra-quarter changes, but there are technicalities.


David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/acs-actividades-de-construccion-y-servicios" target="_blank" data-smartkarma-citation="entities:21242:1" rel="noopener">Actividades de Construcción y Servicios (ACS SM)</a> , via 52.3%-held <a href="https://www.smartkarma.com/entities/hochtief-ag" target="_blank" data-smartkarma-citation="entities:21652:1" rel="noopener">Hochtief (HOT GR)</a>, is offering $22/share for all <a href="https://www.smartkarma.com/entities/cimic-group-ltd" target="_blank" data-smartkarma-citation="entities:20030:1" rel="noopener">CIMIC (CIM AU)</a> shares it does not own. The Offer is unconditional.</li>
<li>The Offer Price is a 33% premium to last close. The price will not be increased. </li>
<li>Hochtief intends to exercise its right to on-market purchases. CIMIC's board has yet to comment on the Offer.</li>
</ul>



Actividades de Construcción y Servicios (ACS SM) , via 52.3%-held Hochtief (HOT GR), is offering $22/share for all CIMIC (CIM AU) shares it does not own. The Offer is unconditional.
The Offer Price is a 33% premium to last close. The price will not be increased. 
Hochtief intends to exercise its right to on-market purchases. CIMIC's board has yet to comment on the Offer.


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hochtief-ag" target="_blank" data-smartkarma-citation="entities:21652:1" rel="noopener">Hochtief AG (HOT GR)</a> holds 78.58% of <a href="https://www.smartkarma.com/entities/cimic-group-ltd" target="_blank" data-smartkarma-citation="entities:20030:1" rel="noopener">CIMIC Group Ltd (CIM AU)</a> and has made an offer to acquire the remaining shares at A$22/share.</li>
<li>Hochtief will squeeze out the remaining shareholders once it holds more than 90% of the shares in <a href="https://www.smartkarma.com/entities/cimic-group-ltd" target="_blank" data-smartkarma-citation="entities:20030:1" rel="noopener">CIMIC Group Ltd (CIM AU)</a>. </li>
<li>We think the offer is fair and expect the stock to open close to A$22/share tomorrow. There could be ad hoc inclusion to the ASX200 index in May or June.</li>
</ul>



Hochtief AG (HOT GR) holds 78.58% of CIMIC Group Ltd (CIM AU) and has made an offer to acquire the remaining shares at A$22/share.
Hochtief will squeeze out the remaining shareholders once it holds more than 90% of the shares in CIMIC Group Ltd (CIM AU). 
We think the offer is fair and expect the stock to open close to A$22/share tomorrow. There could be ad hoc inclusion to the ASX200 index in May or June.


CIMIC (CIM AU) Takeover Offer: Should Get Done; Index Implications

European Event-Driven Analyst

Jesus Rodriguez Aguilar

ACS, Actividades de Construcción y Servicios / Event-Driven

ACS, Actividades de Construcción y Servicios

ACS enters the bid for Autostrade with an offer of €10 bn (4.5x 2019 EBITDA), above the €9.1 offered by the CNP consortium.
<div>
<ul>
<li>Both offers are within the range considered by the market €9 bn -  €11 bn, although below the €12 bn that Atlantia believes ASPI is worth.</li>
<li>
The activist fund TCI, which has 10% of Atlantia argues that the value of ASPI ranges between €11 bn and €12 bn.
</li>
</ul>
Assuming that ACS participates in the acquisition of ASPI by contributing funds equivalent to a percentage of the value of ASPI (88%) similar to its stake in Abertis (30% though ACS and 20% through Hochtief), and assuming a €10 bn valuation (for 100%), the investment would amount to c. €4 bn (vs. c. €5 bn in cash that ACS would receive in Q4 2021 from the industrial services disposal).
<ul>
<li>Proforma net debt/EBITDA above 2x, although CF would gain in visibility and stability, assuming that ACS does not use the proceeds to reduce leverage.</li>
<li>Dividends upstreamed to ACS via a potential Abertis/ASPI would increase its FCF (and therefore its dividend payout potential). Depending on how the deal is structured, it could add c. €500 mn to ACS's FCF.</li>
</ul>
That said, details on the possible economic offer and the structure of the operation are very limited, therefore it seems difficult to evaluate the impact on TP.
ACS has a 2021e 7% dividend yield (forecasted dividend of €1.93, source Capital IQ consensus), funded by Hochtief and Abertis, so it does not seem at risk. But if the ASPI operation succeeds, ACS will become an infrastructure focused company. Pension funds would be willing to acquire its shares up to a price where dividend yield reaches around 3%, thus meaning a substantial re-rating of ACS.
From my SOTP valuation, on conservative assumptions, there is a 15% upside to ACS, with the optionality of a deal to acquire ASPI as part of a consortium. Recommendation is long ACS, TP €32.6.
</div>

ACS enters the bid for Autostrade with an offer of €10 bn (4.5x 2019 EBITDA), above the €9.1 offered by the CNP consortium.


Both offers are within the range considered by the market €9 bn -  €11 bn, although below the €12 bn that Atlantia believes ASPI is worth.

The activist fund TCI, which has 10% of Atlantia argues that the value of ASPI ranges between €11 bn and €12 bn.


Assuming that ACS participates in the acquisition of ASPI by contributing funds equivalent to a percentage of the value of ASPI (88%) similar to its stake in Abertis (30% though ACS and 20% through Hochtief), and assuming a €10 bn valuation (for 100%), the investment would amount to c. €4 bn (vs. c. €5 bn in cash that ACS would receive in Q4 2021 from the industrial services disposal).

Proforma net debt/EBITDA above 2x, although CF would gain in visibility and stability, assuming that ACS does not use the proceeds to reduce leverage.
Dividends upstreamed to ACS via a potential Abertis/ASPI would increase its FCF (and therefore its dividend payout potential). Depending on how the deal is structured, it could add c. €500 mn to ACS's FCF.

That said, details on the possible economic offer and the structure of the operation are very limited, therefore it seems difficult to evaluate the impact on TP.
ACS has a 2021e 7% dividend yield (forecasted dividend of €1.93, source Capital IQ consensus), funded by Hochtief and Abertis, so it does not seem at risk. But if the ASPI operation succeeds, ACS will become an infrastructure focused company. Pension funds would be willing to acquire its shares up to a price where dividend yield reaches around 3%, thus meaning a substantial re-rating of ACS.
From my SOTP valuation, on conservative assumptions, there is a 15% upside to ACS, with the optionality of a deal to acquire ASPI as part of a consortium. Recommendation is long ACS, TP €32.6.


Atlantia - CDP - ACS: Moving Parts in the Acquisition of ASPI

Germany

Brenntag AG sells and distributes industrial and specialty chemicals.  The Company also develops and prepares specific chemical compounds and offers analysis services.  Brenntag's customers include oil and gas, paint, cosmetic, pharmaceutical, and water treatment companies.

GEA Group Aktiengesellschaft is a farm technology, mechanical equipment, process industry and refrigeration technology company. The Company supplies equipment for the food processing industry. GEA products have industrial, pharmaceutical and chemical applications.

KION Group AG provides material handling solutions. The Company offers forklifts, warehouse equipments, and other industrial trucks.

Rational AG manufactures and markets food preparation appliances/processors and kitchen accessories for caterers and canteen kitchens.  The Company's products cook and reheat food.  Rational sells primarily to hotels, restaurants, canteens and caterers in Europe, the United States, and Asia.

DMG Mori Aktiengesellschaft manufactures and markets machine tools. The Company's products include automatic lathes, milling, turning, laser, and ultrasonic machines.

Krones AG designs and manufactures production machinery and packaging robots for breweries, soft drink and water bottlers, chemical manufacturers, and food processors.  The Company produces cleaning, filling, labeling, sorting, and packaging production systems for the handling of plastic and glass containers. Krones operates worldwide.

KUKA AG manufactures production machinery and equipment, and offers production engineering services.  The Company designs and builds automobile factories, and produces welding and assembly systems, industrial robots, turning machines, packaging machinery, and measuring and control instruments for water and gas suppliers.  KUKA operates in Europe, the Americas, and Asia.

Jungheinrich AG manufactures battery, diesel, and gas powered merchandise stackers and forklifts.  The products are used in warehouses, production facilities, and for point-of-sales retail storage.  It produces shelving systems, rents forklifts, sells used forklifts, offers financing, and manages forklift fleets.  The Company sells in Europe, the Americas, Africa, and Asia.

MTU Aero Engines AG develops and manufactures engines and offers commercial engine services and support.  The Company sells to manufacturers and operators of engines and industrial gas turbines across the world.

China Communications Construction Company Ltd. is a transportation infrastructure group.  The Company is involved in infrastructure construction, infrastructure design, dredging, and port machinery manufacturing.  China Communications has operations worldwide.

China Communications Construction (1800 HK)

GMR Infrastructure is an infrastructure company with interests in airports, power and roads. The Company is developing a greenfield international airport at Hyderabad, and is also operating, managing and developing the Delhi airport. Additionally, it is involved in development and operation of power plants and road projects in India.

OBAYASHI CORPORATION is a general contractor operating nationwide and overseas. The Company builds commercial, residential, institutional buildings with earthquake-resistant technology.  Obayashi also performs civil engineering works for such as railroads.  The Company, through its subsidiaries, operates real estate, golf course, and financial businesses.

Fluor Corporation is a professional services company. The Company provides engineering, procurement, construction and maintenance as well as project management services on a global basis. Fluor also provides outsourcing of maintenance services and asset operations, equipment rental and sales, business support services, and other services.

KBR, Inc. is a global engineering, construction, and services company supporting the energy, petrochemicals, government services, and civil infrastructure sectors.  The Company offers a wide range of services through two business segments, Energy and Chemicals (E&C) and Government and Infrastructure (G&I).

KAJIMA CORPORATION is a general contractor operating nationwide and overseas. The Company builds commercial, residential, and institutional buildings with high-rise and earthquake-resistant construction technology.  Kajima also performs large scale civil engineering works such as nuclear power plants. The Company operates real estate and office automation equipment businesses.

Comfort Systems USA, Inc. provides heating, ventilation, and air conditioning system installation, maintenance, repair, and replacement services. The Company's commercial and industrial markets include office buildings, retail centers, apartment complexes, hotels, manufacturing plants, and government facilities.

MasTec, Inc. is a specialty contractor operating across a range of industries. The Company activities are the building, installation, maintenance, and upgrade of utility and communications infrastructure, including electrical utility transmission and distribution, wind farms, solar farms, renewable energy and natural gas infrastructure, wireless, and wireline.

TAISEI CORPORATION is a general contractor operating nationwide and overseas. The Company builds residential, commercial, and institutional buildings such as condominiums and single-family houses.  Taisei also performs civil engineering works for roads.  The Company, through its subsidiaries, operates real estate, resort development, and financial businesses.

Metallurgical Corporation of China Ltd., through its subsidiaries, operates in EPC projects (engineering, procurement and construction) mainly for metallurgical facilities, natural resources exploration, equipment fabrication, and property development.

Metallurgical Corporation Of China Ltd (601618 CH)

Hochtief AG provides construction and construction related services worldwide. The Company finances, designs, builds, constructs and operates a wide variety of facilities through its five divisions; Airport, Development, Construction Services Americas, Construction Services Asia Pacific, and Construction Services Europe.

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Hochtief AG (HOT GR)

CIMIC in an Off-Market Takeover Bid by Hochtief

Hochtief announced an unconditional off-market takeover offer at A$22 cash per share, a 33.4% premium to the last close. The offer presents a...

Arun George

CIMIC (CIM AU) Replacement in ASX200

CIMIC's takeover by Hochtief triggers another index change in ASX200 - likely sometime in April. This brings forward the first intra-quarter ASX200...

Travis Lundy

Hochtief's Unconditional Offer For CIMIC

Hochtief has announced its intention to make an unconditional and final offmarket Offer for CIMIC at $22.00/share. This looks done and will...

David Blennerhassett

CIMIC (CIM AU) Takeover Offer: Should Get Done; Index Implications

Hochtief has offered to buy the shares it does not own in CIMIC at A$22/share. At a one year high and in line with peer valuation, we think this...

Brian Freitas

Atlantia - CDP - ACS: Moving Parts in the Acquisition of ASPI

From my SOTP valuation, on conservative assumptions, there is a 15% upside to ACS, with the optionality of a deal to acquire ASPI as part of a...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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CIMIC in an Off-Market Takeover Bid by Hochtief

Hochtief announced an unconditional off-market takeover offer at A$22 cash per share, a 33.4% premium to the last close. The offer presents a...

Arun George

CIMIC (CIM AU) Replacement in ASX200

CIMIC's takeover by Hochtief triggers another index change in ASX200 - likely sometime in April. This brings forward the first intra-quarter ASX200...

Travis Lundy

Hochtief's Unconditional Offer For CIMIC

Hochtief has announced its intention to make an unconditional and final off­market Offer for CIMIC at $22.00/share. This looks done and will...

David Blennerhassett

CIMIC (CIM AU) Takeover Offer: Should Get Done; Index Implications

Hochtief has offered to buy the shares it does not own in CIMIC at A$22/share. At a one year high and in line with peer valuation, we think this...

Brian Freitas

Atlantia - CDP - ACS: Moving Parts in the Acquisition of ASPI

From my SOTP valuation, on conservative assumptions, there is a 15% upside to ACS, with the optionality of a deal to acquire ASPI as part of a...

Jesus Rodriguez Aguilar

Hochtief has announced its intention to make an unconditional and final offmarket Offer for CIMIC at $22.00/share. This looks done and will...