European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<a href="https://www.smartkarma.com/entities/zooplus-ag" target="_blank" data-smartkarma-citation="entities:21749:1" rel="noopener">zooplus AG (ZO1 GR)</a> welcomed the €3.4 bn bid by <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> that trumps an improved offer by Hellman &amp; Friedman. Consideration is €470/share, in cash, an implied equity value of c. €3,360 mn (€3,600 mn as reported) and implied EV of €3,286.5 mn. The counteroffer represents 1.45x EV/Fwd Revenue, 39x EV/Fwd EBITDA and 116.3x Fwd P/E. It is a 69% premium to the unaffected share price as of 12 August, the day before H&amp;F announced its voluntary public takeover offer.
Hellman &amp; Friedman had previously hiked its offer from €390 to €460 per share (18% increase) after Zooplus confirmed Bloomberg reports that it was in talks with KKR and EQT about counteroffers.
The ongoing bidding war for zooplus AG shows that full valuations are not an obstacle for some private equity funds as they have record amounts of dry powder from investors (pension funds, insurance companies and HNW individuals).
Comparables are trading at a mean 1.35x EV/Fwd Revenue. This would imply a (generous) fair value for zooplus AG of €438.7/share. The shares are trading c. 11% above that value and offer 1.6% 22e FCF yield. Pet population is rising in Europe though and zooplus AG could keep on adding market share. The bottom line of zooplus is positive, unlike many retail e-commerce peers.
KKR withdrew after Hellman &amp; Friedman increased the prior offer price by 18%. The small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, although I do not rule out further small increases. Gross spread to EQT's offer is -3.3%. We may be already witnessing a case of winner's curse, but of course this does not rule out a further bid by Hellman &amp; Friedman. Hats off to the Board of zooplus AG.

zooplus AG (ZO1 GR) welcomed the €3.4 bn bid by EQT AB (EQT SS) that trumps an improved offer by Hellman &amp; Friedman. Consideration is €470/share, in cash, an implied equity value of c. €3,360 mn (€3,600 mn as reported) and implied EV of €3,286.5 mn. The counteroffer represents 1.45x EV/Fwd Revenue, 39x EV/Fwd EBITDA and 116.3x Fwd P/E. It is a 69% premium to the unaffected share price as of 12 August, the day before H&amp;F announced its voluntary public takeover offer.
Hellman &amp; Friedman had previously hiked its offer from €390 to €460 per share (18% increase) after Zooplus confirmed Bloomberg reports that it was in talks with KKR and EQT about counteroffers.
The ongoing bidding war for zooplus AG shows that full valuations are not an obstacle for some private equity funds as they have record amounts of dry powder from investors (pension funds, insurance companies and HNW individuals).
Comparables are trading at a mean 1.35x EV/Fwd Revenue. This would imply a (generous) fair value for zooplus AG of €438.7/share. The shares are trading c. 11% above that value and offer 1.6% 22e FCF yield. Pet population is rising in Europe though and zooplus AG could keep on adding market share. The bottom line of zooplus is positive, unlike many retail e-commerce peers.
KKR withdrew after Hellman &amp; Friedman increased the prior offer price by 18%. The small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, although I do not rule out further small increases. Gross spread to EQT's offer is -3.3%. We may be already witnessing a case of winner's curse, but of course this does not rule out a further bid by Hellman &amp; Friedman. Hats off to the Board of zooplus AG.

Solarpack Corp Tecnologica / Event-Driven

On 16 June, EQT Infrastructure, a fund managed by <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> , <a href="http://cnmv.es/portal/verDoc.axd?t=%7B18435c31-8db9-4abc-b1e4-bf7872682d88%7D" target="_blank" rel="noopener">announced a voluntary takeover bid</a> for 100% of the shares of <a href="https://www.smartkarma.com/entities/solarpack-corp-tecnologica-sa" target="_blank" data-smartkarma-citation="entities:33493:1" rel="noopener">Solarpack Corp Tecnologica (SPK SM)</a>, a developer and owner of solar photovoltaic plants, mainly active in Spain, Chile and India.
Consideration is €26.5/share, in cash, for 100% of the shares, for an implied equity value of €881.2 mn and an implied EV of €1,258.7 mn. This is 10.1x EV/Fwd Revenue and 18.7X EV/Fwd EBITDA.
EQT Infrastructure has signed irrevocable agreements for 50.957% (with €5 mn break-up fee, c. 0.6% of the transaction).
The rationale seems to be the development of the company under EQT ownership.
The offer is not particularly generous on the basis of a median TP on Capital IQ consensus of €29.4/share, but the premium offered is 45% to the prior closing. With a nearly 51% irrevocable undertakings committed, the market is discounting the success of the offer.
The shares increased by 43% and closed at €26.15, a gross spread of 1.3%, c. 4% annualised assuming the deal closes in 9 months.
Albeit the spread is not terribly exciting, I recommend long SPK SM, and would take advantage of any dip to add to the position.

On 16 June, EQT Infrastructure, a fund managed by EQT AB (EQT SS) , announced a voluntary takeover bid for 100% of the shares of Solarpack Corp Tecnologica (SPK SM), a developer and owner of solar photovoltaic plants, mainly active in Spain, Chile and India.
Consideration is €26.5/share, in cash, for 100% of the shares, for an implied equity value of €881.2 mn and an implied EV of €1,258.7 mn. This is 10.1x EV/Fwd Revenue and 18.7X EV/Fwd EBITDA.
EQT Infrastructure has signed irrevocable agreements for 50.957% (with €5 mn break-up fee, c. 0.6% of the transaction).
The rationale seems to be the development of the company under EQT ownership.
The offer is not particularly generous on the basis of a median TP on Capital IQ consensus of €29.4/share, but the premium offered is 45% to the prior closing. With a nearly 51% irrevocable undertakings committed, the market is discounting the success of the offer.
The shares increased by 43% and closed at €26.15, a gross spread of 1.3%, c. 4% annualised assuming the deal closes in 9 months.
Albeit the spread is not terribly exciting, I recommend long SPK SM, and would take advantage of any dip to add to the position.

EQT/Solarpack: Friendly Take-Private Deal

On 7 April, The Wall Street Journal reported that <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> and Stonepeak Infrastructure Partners LP are preparing a joint bid for <a href="https://www.smartkarma.com/entities/koninklijke-kpn-nv" target="_blank" data-smartkarma-citation="entities:21122:1" rel="noopener">Koninklijke KPN (KPN NA)</a>. Market rumours put the offer price at €3 per share. On 8 April, 55 million shares of KPN were traded.
On October 12, KPN shares shot up 10% amid rumors of a possible EQT takeover. KPN was then trading at €2.4 per share. KPN has a protection mechanism against takeover bids (Stichting), and the Dutch government has the right to veto offers, as it considers that the telecommunications network is critical infrastructure. Both are discussed in <a href="https://www.smartkarma.com/insights/k-p-n-e-q-t-prospective-private-equity-bid" target="_blank" data-smartkarma-citation="insights:44129" rel="noopener">K P N - E Q T: Prospective Private Equity Bid</a>. Carlos Slim (through <a href="https://www.smartkarma.com/entities/america-movil-sab-de-cv" target="_blank" data-smartkarma-citation="entities:24634:1" rel="noopener">America Movil Sab De Cv (AMXL MM)</a>) owns a 20% stake in KPN.
KPN has had a good run and gone over my TP from October, on a return to growth basis (see Capital IQ projections further in the next section), with M&amp;A optionality.
KPN has a strong management to run a mature business like the Dutch fixed line/fibre network operations. KPN Dutch's operations are efficiently run, with stable CF and estimated EBITDA margins above 45% for the period 2021e-2023e, in one of the most competitive and mature Telecom markets in Europe. KPN and Vodafone-Zigo are the top players, with T-Mobile the third major player.
Using Capital IQ consensus numbers, a 7.6x EV/EBITDA exit multiple, an acquisition premium of 10% to last closing price (€2.919 per share), an equity portion of 25% and spread of 250bps to 10-year Euro swap rates, I think an offer price of €3.212 could generate an IRR of 10.7% by year 8. And that is probably the bare minimum that the Board of KPN will be willing to discuss. Carlos Slim failed, EQT would not like history repeating itself.
On this basis, recommendation is long KPN, TP €3.211.
Shares should be sustained by a 4.7% dividend yield.

On 7 April, The Wall Street Journal reported that EQT AB (EQT SS) and Stonepeak Infrastructure Partners LP are preparing a joint bid for Koninklijke KPN (KPN NA). Market rumours put the offer price at €3 per share. On 8 April, 55 million shares of KPN were traded.
On October 12, KPN shares shot up 10% amid rumors of a possible EQT takeover. KPN was then trading at €2.4 per share. KPN has a protection mechanism against takeover bids (Stichting), and the Dutch government has the right to veto offers, as it considers that the telecommunications network is critical infrastructure. Both are discussed in K P N - E Q T: Prospective Private Equity Bid. Carlos Slim (through America Movil Sab De Cv (AMXL MM)) owns a 20% stake in KPN.
KPN has had a good run and gone over my TP from October, on a return to growth basis (see Capital IQ projections further in the next section), with M&amp;A optionality.
KPN has a strong management to run a mature business like the Dutch fixed line/fibre network operations. KPN Dutch's operations are efficiently run, with stable CF and estimated EBITDA margins above 45% for the period 2021e-2023e, in one of the most competitive and mature Telecom markets in Europe. KPN and Vodafone-Zigo are the top players, with T-Mobile the third major player.
Using Capital IQ consensus numbers, a 7.6x EV/EBITDA exit multiple, an acquisition premium of 10% to last closing price (€2.919 per share), an equity portion of 25% and spread of 250bps to 10-year Euro swap rates, I think an offer price of €3.212 could generate an IRR of 10.7% by year 8. And that is probably the bare minimum that the Board of KPN will be willing to discuss. Carlos Slim failed, EQT would not like history repeating itself.
On this basis, recommendation is long KPN, TP €3.211.
Shares should be sustained by a 4.7% dividend yield. 

K P N - E Q T Consortium: Prospective Bid (II)

<a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> has announced a mandatory offer for <a href="https://www.smartkarma.com/entities/recipharm-ab" target="_blank" data-smartkarma-citation="entities:22463:1" rel="noopener">Recipharm AB (RECIB SS)</a>, which values the company at SEK23.6 bn (c.$2.8 bn).
<ul class="">
<li>consideration is SEK 220 per share, a 22.9% premium to Recipharm’s closing price on the prior trading session, subject to acceptance by more than 90% of total outstanding shares (can be waived, the reason is to be able to initiate squeeze-out and delisting).</li>
<li>
Implied equity value of SEK 22,209.94 mn. Net debt assumed amounts to SEK7,907 mn.
</li>
<li>
The offer represents 2.8x EV/Fwd Revenue, 15.9x EV/Fwd EBITDA and 24.5x P/Fwd E.
</li>
</ul>
Roar BidCo has secured ownership of c. 25.7% of the shares and 74.3% of the votes in Recipharm through Lars Backsell, chairman, and Thomas Eldered, CEO, founders and indirect shareholders of Recipharm and are participating with EQT IX in the Offer.
The pharmaceutical industry is very competitive and continuously evolving and CDMOs need to adapt accordingly, by investing in new technologies and developing better service offerings. Many CDMOs are operating in a highly fragmented market that is currently under­going a significant consolidation.
EQT expects the consolidation trend to continue as a result of customer needs and will provide funding and its industry network so that Recipharm can accelerate its inorganic growth and digitalisation investments.
On an EV/Fwd EBITDA basis, the mean across comparables is 15.9x and the implied equity value is SEK 218.45 vs an offer price of SEK 220, therefore the offer seems fair, but not overly generous considering the increase in EPS in the coming years.
Recipharm closed at SEK 218.2 (4.72 mn shares traded), a 0.8% gross spread to the offer price, c.2.5% annualised assuming completion by mid-April, which frankly is not massive. On the other hand, this reflects that the deal is highly likely to complete on the announced terms. Interloper risk is virtually nil given the voting power of the two main shareholders.
I would wait for any share price weakness to set up a position.

EQT AB (EQT SS) has announced a mandatory offer for Recipharm AB (RECIB SS), which values the company at SEK23.6 bn (c.$2.8 bn).

consideration is SEK 220 per share, a 22.9% premium to Recipharm’s closing price on the prior trading session, subject to acceptance by more than 90% of total outstanding shares (can be waived, the reason is to be able to initiate squeeze-out and delisting).

Implied equity value of SEK 22,209.94 mn. Net debt assumed amounts to SEK7,907 mn.


The offer represents 2.8x EV/Fwd Revenue, 15.9x EV/Fwd EBITDA and 24.5x P/Fwd E.


Roar BidCo has secured ownership of c. 25.7% of the shares and 74.3% of the votes in Recipharm through Lars Backsell, chairman, and Thomas Eldered, CEO, founders and indirect shareholders of Recipharm and are participating with EQT IX in the Offer.
The pharmaceutical industry is very competitive and continuously evolving and CDMOs need to adapt accordingly, by investing in new technologies and developing better service offerings. Many CDMOs are operating in a highly fragmented market that is currently under­going a significant consolidation.
EQT expects the consolidation trend to continue as a result of customer needs and will provide funding and its industry network so that Recipharm can accelerate its inorganic growth and digitalisation investments.
On an EV/Fwd EBITDA basis, the mean across comparables is 15.9x and the implied equity value is SEK 218.45 vs an offer price of SEK 220, therefore the offer seems fair, but not overly generous considering the increase in EPS in the coming years.
Recipharm closed at SEK 218.2 (4.72 mn shares traded), a 0.8% gross spread to the offer price, c.2.5% annualised assuming completion by mid-April, which frankly is not massive. On the other hand, this reflects that the deal is highly likely to complete on the announced terms. Interloper risk is virtually nil given the voting power of the two main shareholders.
I would wait for any share price weakness to set up a position.

On 21 October, Bloomberg reported that Clayton Dubilier &amp; Rice LLC and other undisclosed private equity firms expressed interest in acquiring German industrial service provider <a href="https://www.smartkarma.com/entities/bilfinger-se" target="_blank" data-smartkarma-citation="entities:21630:1" rel="noopener">Bilfinger SE (GBF GR)</a>.
On 6 November, Bloomberg reported that Bilfinger launched a sale process and hired an adviser to formally gauge buyout interest. Certain prospective private equity buyers reportedly are looking to take over and expand Bilfinger through acquisitions and eventually take the larger entity public. Bilfinger has not yet finalized its plans and could still decide against a sale.
Bilfinger has released Q3 results, the shares have dropped 7.5%.
I value Bilfinger as a SOTP: using comparable companies, the average of the median implied EV/Forward EBITDA and Forward P/E is €20.62 per share, plus the BV of Apleona, €5.95 per share (€240 mn vs. Bilfinger's market cap of €899 mn), gives a total of €26.57 per share.
<ul>
<li>So either the market is very pessimistic about the growth and margins recovery of Bilfinger (for a reason) or the stake in Apleona comes for free.</li>
<li>Both the ongoing takeover speculation and the potential sale of Apleona currently seem to be the main drivers for the share price, but both are factors beyond the control of Bilfinger's management. Results remain challenging due to weakness in the markets where Bilfinger operates, but cost controls and higher FCF are positives.</li>
</ul>
Recommendation: BUY on SOTP higher than the current market value.
The Insight is marked bullish, although it comes with a health warning.

On 21 October, Bloomberg reported that Clayton Dubilier &amp; Rice LLC and other undisclosed private equity firms expressed interest in acquiring German industrial service provider Bilfinger SE (GBF GR).
On 6 November, Bloomberg reported that Bilfinger launched a sale process and hired an adviser to formally gauge buyout interest. Certain prospective private equity buyers reportedly are looking to take over and expand Bilfinger through acquisitions and eventually take the larger entity public. Bilfinger has not yet finalized its plans and could still decide against a sale.
Bilfinger has released Q3 results, the shares have dropped 7.5%.
I value Bilfinger as a SOTP: using comparable companies, the average of the median implied EV/Forward EBITDA and Forward P/E is €20.62 per share, plus the BV of Apleona, €5.95 per share (€240 mn vs. Bilfinger's market cap of €899 mn), gives a total of €26.57 per share.

So either the market is very pessimistic about the growth and margins recovery of Bilfinger (for a reason) or the stake in Apleona comes for free.
Both the ongoing takeover speculation and the potential sale of Apleona currently seem to be the main drivers for the share price, but both are factors beyond the control of Bilfinger's management. Results remain challenging due to weakness in the markets where Bilfinger operates, but cost controls and higher FCF are positives.

Recommendation: BUY on SOTP higher than the current market value.
The Insight is marked bullish, although it comes with a health warning.

Sweden

EQT AB operates as an investment firm. The Company invests in equity, ventures, infrastructure, and real estate properties. EQT serves customers worldwide.

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EQT (EQT SS)

EQT Bites H&F in War for Zooplus AG

Small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, but I do not rule out further small increases. Gross...

Jesus Rodriguez Aguilar

EQT/Solarpack: Friendly Take-Private Deal

With 51% irrevocable undertakings, the market is discounting the success of the offer. Fross spread is 1.3%, c. 4% annualised assuming the deal...

Jesus Rodriguez Aguilar

K P N - E Q T Consortium: Prospective Bid (II)

KPN is back to growth and well-run. On a 7.6x EV/EBITDA exit, 10% acquisition premium of 10%, 25% equity and spread of 250bps to 10-y € swap, an...

Jesus Rodriguez Aguilar

Recipharm-EQT Takeout

Recipharm closed at a 0.8% gross spread to the offer price, not massive, which reflects that the deal is highly likely to complete. Wait for any...

Jesus Rodriguez Aguilar

Bilfinger SE: Private Equity Interest

Using multiples plus the BV of Apleona gives a valuation of €26.57 per share. Either the market is very pessimistic about growth and margins...

Jesus Rodriguez Aguilar

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