European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The CNMV has approved a takeover bid by I Squared and TDR to delist the Spanish vehicle inspection company from the stock market at €12.78/share.</li>
<li>I Squared and TDR Capital have disclosed their intention to promote a special dividend payout of €512 million, or €3.97 per share, should the delisting proceed successfully.</li>
<li>While accepting the offer is probably the wisest course of action for minority shareholders, the lack of agreement with Apollo presents barriers to achieving a streamlined delisting and subsequent merger.</li>
</ul>


The CNMV has approved a takeover bid by I Squared and TDR to delist the Spanish vehicle inspection company from the stock market at €12.78/share.
I Squared and TDR Capital have disclosed their intention to promote a special dividend payout of €512 million, or €3.97 per share, should the delisting proceed successfully.
While accepting the offer is probably the wisest course of action for minority shareholders, the lack of agreement with Apollo presents barriers to achieving a streamlined delisting and subsequent merger.


Inside the Ongoing Struggle for Control of Applus: Strategic Moves and Stakeholder Impacts

<ul>
<li>I Squared and TDR presented a final offer price of €12.78/share in cash, marking a 16.2% increase over their prior bid and surpassing Apollo Global Management's final offer of €12.51/share.</li>
<li>The winning offer values the share capital at €1,649 million (7.3x EV/Fwd NTM EBITDA, 13.2x Fwd P/E), 34% above Apollo's initial offer.</li>
<li>Gross spread is 0.2%. Settlement could happen around 27 May, with 3.7% estimated annual return.</li>
</ul>


I Squared and TDR presented a final offer price of €12.78/share in cash, marking a 16.2% increase over their prior bid and surpassing Apollo Global Management's final offer of €12.51/share.
The winning offer values the share capital at €1,649 million (7.3x EV/Fwd NTM EBITDA, 13.2x Fwd P/E), 34% above Apollo's initial offer.
Gross spread is 0.2%. Settlement could happen around 27 May, with 3.7% estimated annual return.


I Squared & TDR Win the Long Battle for Applus at the Final Auction

<ul>
<li>Apollo had last week improved its offer price to €10.65/share of <a href="https://www.smartkarma.com/entities/applus-services-sa" target="_blank" data-smartkarma-citation="entities:21249:1" rel="noopener">Applus Services SA (APPS SM)</a> and acquired 21.85% of the share capital. Amber Equity signaled it continued in the race.</li>
<li>Amber Equity has raised to €11/share, 3.3% above Apollo's last offer, for an implied equity value of c. €1,420 million, implied EV of €2,412 million, 6.8x EV/NTM Fwd EBITDA.</li>
<li>After the CNMV authorises the bid from Amber Equity, a 30-day acceptance period will open. Two most likely scenarios are either winner's curse or the funds agree a 50-50 split.</li>
</ul>


Apollo had last week improved its offer price to €10.65/share of Applus Services SA (APPS SM) and acquired 21.85% of the share capital. Amber Equity signaled it continued in the race.
Amber Equity has raised to €11/share, 3.3% above Apollo's last offer, for an implied equity value of c. €1,420 million, implied EV of €2,412 million, 6.8x EV/NTM Fwd EBITDA.
After the CNMV authorises the bid from Amber Equity, a 30-day acceptance period will open. Two most likely scenarios are either winner's curse or the funds agree a 50-50 split.


I Squared & TDR/Applus: Counteroffer at €11.0

<ul>
<li>According to Expansion, Amber Equity (I Squared/TDR consortium vehicle), has signal its readiness to counteroffer between €10.65-€11 per <a href="https://www.smartkarma.com/entities/applus-services-sa" target="_blank" data-smartkarma-citation="entities:21249:1" rel="noopener">Applus Services SA (APPS SM)</a> share and drop minimum acceptance condition to 50.01%.</li>
<li>There are three scenarios now: Amber withdraws (unlikely), final sealed envelope auction or splitting the bounty at the highest offer price, the latter seems increasingly likely considering similar past situations.</li>
<li>At current market prices, IRR by year 8 would be 13.3%. The bidders must indeed be contemplating M&amp;A and economies of scale to boost returns.</li>
</ul>


According to Expansion, Amber Equity (I Squared/TDR consortium vehicle), has signal its readiness to counteroffer between €10.65-€11 per Applus Services SA (APPS SM) share and drop minimum acceptance condition to 50.01%.
There are three scenarios now: Amber withdraws (unlikely), final sealed envelope auction or splitting the bounty at the highest offer price, the latter seems increasingly likely considering similar past situations.
At current market prices, IRR by year 8 would be 13.3%. The bidders must indeed be contemplating M&amp;A and economies of scale to boost returns.


<ul>
<li>Apollo has acquired 21.85% of <a href="https://www.smartkarma.com/entities/applus-services-sa" target="_blank" data-smartkarma-citation="entities:21249:1" rel="noopener">Applus Services SA (APPS SM)</a> from risk arb funds and raised the offer price by 12% to €10.65/share, 9% above I Squared/TDR's offer.</li>
<li>The competing consortium should counterbid to stay in the game. My fair value estimate is €10.92. The shares are trading at €10.88 in the hope of a counteroffer.</li>
<li>If you have not been holding the shares since the outset (I have been positive about the shares since May), I would probably weight the risk/reward before getting involved.</li>
</ul>


Apollo has acquired 21.85% of Applus Services SA (APPS SM) from risk arb funds and raised the offer price by 12% to €10.65/share, 9% above I Squared/TDR's offer.
The competing consortium should counterbid to stay in the game. My fair value estimate is €10.92. The shares are trading at €10.88 in the hope of a counteroffer.
If you have not been holding the shares since the outset (I have been positive about the shares since May), I would probably weight the risk/reward before getting involved.


Apollo Increases Its Advantage in the Bidding War

Spain

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

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Applus Services SA (APPS SM)

Inside the Ongoing Struggle for Control of Applus: Strategic Moves and Stakeholder Impacts

The CNMV has approved a takeover bid by I Squared and TDR to delist the Spanish vehicle inspection company from the stock market at €12.78/share.

Jesus Rodriguez Aguilar

I Squared & TDR Win the Long Battle for Applus at the Final Auction

I Squared and TDR presented a final offer price of €12.78/share in cash, marking a 16.2% increase over their prior bid and surpassing Apollo Global...

Jesus Rodriguez Aguilar

I Squared & TDR/Applus: Counteroffer at €11.0

Amber Equity reacts to Apollo's strike by raising its offer for Applus Services to €11/share, with two likely scenarios for a final act due soon....

Jesus Rodriguez Aguilar

Three Scenarios in a Bidding Battle

Amber Equity is ready to counteroffer for Applus Services shares. It is increasingly likely a sealed envelope auction or splitting the bounty at...

Jesus Rodriguez Aguilar

Apollo Increases Its Advantage in the Bidding War

Apollo acquires 21.85% of Applus Services, raises offer price by 12% and 9% above I Squared/TDR. The market expects a counteroffer. If not already...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Inside the Ongoing Struggle for Control of Applus: Strategic Moves and Stakeholder Impacts

The CNMV has approved a takeover bid by I Squared and TDR to delist the Spanish vehicle inspection company from the stock market at €12.78/share.

Jesus Rodriguez Aguilar

I Squared & TDR Win the Long Battle for Applus at the Final Auction

I Squared and TDR presented a final offer price of €12.78/share in cash, marking a 16.2% increase over their prior bid and surpassing Apollo Global...

Jesus Rodriguez Aguilar

I Squared & TDR/Applus: Counteroffer at €11.0

​Amber Equity reacts to Apollo's strike by raising its offer for Applus Services to €11/share, with two likely scenarios for a final act due soon....

Jesus Rodriguez Aguilar

Three Scenarios in a Bidding Battle

​Amber Equity is ready to counteroffer for Applus Services shares. It is increasingly likely a sealed envelope auction or splitting the bounty at...

Jesus Rodriguez Aguilar

Apollo Increases Its Advantage in the Bidding War

​Apollo acquires 21.85% of Applus Services, raises offer price by 12% and 9% above I Squared/TDR. The market expects a counteroffer. If not already...

Jesus Rodriguez Aguilar

Amber Equity reacts to Apollo's strike by raising its offer for Applus Services to €11/share, with two likely scenarios for a final act due soon....

Amber Equity is ready to counteroffer for Applus Services shares. It is increasingly likely a sealed envelope auction or splitting the bounty at...

Apollo acquires 21.85% of Applus Services, raises offer price by 12% and 9% above I Squared/TDR. The market expects a counteroffer. If not already...