European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The Spanish government has approved Esseco's bid for Ercros, after previously approving Bondalti's offer in June, signaling a significant step in the ongoing takeover battle for the chemical company.</li>
<li>The next step lies with the CNMV, Spain’s stock market regulator, which must first approve Bondalti’s bid before considering Esseco’s. However, both bids have opposition from shareholders holding 27%.</li>
<li>Ercros is trading in line with comparables, but there's potential for bidders to improve their offers, which is likely. Gross spread to Esseco's offer is 2%. Reiterate long.</li>
</ul>


The Spanish government has approved Esseco's bid for Ercros, after previously approving Bondalti's offer in June, signaling a significant step in the ongoing takeover battle for the chemical company.
The next step lies with the CNMV, Spain’s stock market regulator, which must first approve Bondalti’s bid before considering Esseco’s. However, both bids have opposition from shareholders holding 27%.
Ercros is trading in line with comparables, but there's potential for bidders to improve their offers, which is likely. Gross spread to Esseco's offer is 2%. Reiterate long.


Esseco/Ercros: Green Light from Government

<ul>
<li>Esseco, an Italian manufacturer of chlorine and sulfur-based chemicals,  has made a competing all-cash offer at €3.84/share, cum dividend, valuing 100% of <a href="https://www.smartkarma.com/entities/ercros-sa" target="_blank" data-smartkarma-citation="entities:40951:1" rel="noopener">Ercros (ECR SM)</a>  at €351 million.</li>
<li>Putting 25e EBITDA of €70 million (source: IBES consensus), on the median of comparables, the stand-alone fair-value per share of Ercros is €4.4. Neither bid accounts for synergies. </li>
<li>The strategic fit of Ercros for both bidders and its intrinsic value suggest a likely bidding war, given the scarcity of listed companies similar to Ercros. Reiterate long.</li>
</ul>


Esseco, an Italian manufacturer of chlorine and sulfur-based chemicals,  has made a competing all-cash offer at €3.84/share, cum dividend, valuing 100% of Ercros (ECR SM)  at €351 million.
Putting 25e EBITDA of €70 million (source: IBES consensus), on the median of comparables, the stand-alone fair-value per share of Ercros is €4.4. Neither bid accounts for synergies. 
The strategic fit of Ercros for both bidders and its intrinsic value suggest a likely bidding war, given the scarcity of listed companies similar to Ercros. Reiterate long.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/ercros-sa" target="_blank" data-smartkarma-citation="entities:40951:1" rel="noopener">Ercros (ECR SM)</a> 's advisors will seek an improvement in Bondalti's €3.6/share offer, which comes amidst a sharp decline in EBITDA compared to 2022, and launched at the bottom of the cycle.</li>
<li>An improved offer price of €4.4/share, a 22% increase, would represent 6x EV/25e EBITDA, 11.3x 25e P/E, and thus could gain support from the Board.</li>
<li>Gross spread is 1.25%. Considering the potential for an improved offer price, I'd be long.</li>
</ul>



Ercros (ECR SM) 's advisors will seek an improvement in Bondalti's €3.6/share offer, which comes amidst a sharp decline in EBITDA compared to 2022, and launched at the bottom of the cycle.
An improved offer price of €4.4/share, a 22% increase, would represent 6x EV/25e EBITDA, 11.3x 25e P/E, and thus could gain support from the Board.
Gross spread is 1.25%. Considering the potential for an improved offer price, I'd be long.


Bondalti/Ercros: Board Will Seek a Sweetening

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ercros-sa" target="_blank" data-smartkarma-citation="entities:40951:1" rel="noopener">Ercros (ECR SM)</a>, a venerable Spanish chemical company has received a €3.6/share, cum dividend, offer from Bondalti. The premium is 40.6%, implied equity €329.17 million and implied EV €421 million.</li>
<li>The offer represents 6x EV/Fwd NTM EBITDA, typical mid-cycle multiple for commodity chemicals, 12.9x Fwd P/E. The offer price accounts for an improving H2. The shares suffer from low liquidity.</li>
<li>Therefore the top shareholders will be glad to cash in. How long does the Spanish government take to authorise FDI will be the primary concern. Gross spread is 4.7%. Long.
</li>
</ul>



Ercros (ECR SM), a venerable Spanish chemical company has received a €3.6/share, cum dividend, offer from Bondalti. The premium is 40.6%, implied equity €329.17 million and implied EV €421 million.
The offer represents 6x EV/Fwd NTM EBITDA, typical mid-cycle multiple for commodity chemicals, 12.9x Fwd P/E. The offer price accounts for an improving H2. The shares suffer from low liquidity.
Therefore the top shareholders will be glad to cash in. How long does the Spanish government take to authorise FDI will be the primary concern. Gross spread is 4.7%. Long.



Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Keisei Electric Railway Co / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a> places out 1% of <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>, but rejects lowering its stake to 15%.  That is the end of the near-term catalyst.</li>
<li>
<a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> popped after property cooling measures were scrapped. Then gave those gains back. And then some, and is now trading at 0.11x P/B, its lowest-ever level.</li>
<li>The spreads for  both <a href="https://www.smartkarma.com/entities/alumina-ltd" target="_blank" data-smartkarma-citation="entities:939:1" rel="noopener">Alumina Ltd (AWC AU) </a> and <a href="https://www.smartkarma.com/entities/azure-minerals-ltd" target="_blank" data-smartkarma-citation="entities:16538:1" rel="noopener">Azure Minerals (AZS AU)</a> are trading wide; both potentially FIRB-related.</li>
</ul>



Keisei Electric Railway Co (9009 JP) places out 1% of Oriental Land (4661 JP), but rejects lowering its stake to 15%.  That is the end of the near-term catalyst.

New World Development (17 HK) popped after property cooling measures were scrapped. Then gave those gains back. And then some, and is now trading at 0.11x P/B, its lowest-ever level.
The spreads for  both Alumina Ltd (AWC AU)  and Azure Minerals (AZS AU) are trading wide; both potentially FIRB-related.


Last Week in Event SPACE: Keisei Electric, New World Development, Alumina Ltd, Azure Minerals, TDCX

Spain

Ercros SA is an industrial company focused on the manufacture and sale of chemical and pharmaceutical products. It is listed on the Spanish Stock Exchange.  The company is divided  into three areas of activity: a business strategic unit, the intermediate chemicals division, and the pharmaceuticals division. Ecros serves clients worldwide.

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Ercros (ECR SM)

Esseco/Ercros: Green Light from Government

The Spanish government has approved Esseco's bid for Ercros, after previously approving Bondalti's offer in June, signaling a significant step in...

Jesus Rodriguez Aguilar

Esseco/Ercros: Bidding War

Esseco, an Italian manufacturer of chlorine and sulfur-based chemicals, has made a competing all-cash offer at €3.84/share, cum dividend, valuing...

Jesus Rodriguez Aguilar

Bondalti/Ercros: Board Will Seek a Sweetening

Ercros (ECR SM) 's advisors will seek an improvement in Bondalti's €3.6/share offer, which comes amidst a sharp decline in EBITDA compared to 2022,...

Jesus Rodriguez Aguilar

Bondalti/Ercros: Fair Offer

Venerable Spanish chemical company Ercros receives €3.6/share, cum dividend, offer from Bondalti, representing a 40.6% premium and implied equity...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Keisei Electric, New World Development, Alumina Ltd, Azure Minerals, TDCX

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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Esseco/Ercros: Green Light from Government

The Spanish government has approved Esseco's bid for Ercros, after previously approving Bondalti's offer in June, signaling a significant step in...

Jesus Rodriguez Aguilar

Esseco/Ercros: Bidding War

Esseco, an Italian manufacturer of chlorine and sulfur-based chemicals, has made a competing all-cash offer at €3.84/share, cum dividend, valuing...

Jesus Rodriguez Aguilar

Bondalti/Ercros: Board Will Seek a Sweetening

Ercros (ECR SM) 's advisors will seek an improvement in Bondalti's €3.6/share offer, which comes amidst a sharp decline in EBITDA compared to 2022,...

Jesus Rodriguez Aguilar

Bondalti/Ercros: Fair Offer

Venerable ​Spanish chemical company Ercros receives €3.6/share, cum dividend, offer from Bondalti, representing a 40.6% premium and implied equity...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Keisei Electric, New World Development, Alumina Ltd, Azure Minerals, TDCX

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Venerable Spanish chemical company Ercros receives €3.6/share, cum dividend, offer from Bondalti, representing a 40.6% premium and implied equity...