In today’s briefing:
- Sino Oil (702): Possible Jiangxi Jovo Offer
- AMT/Cellnex: Lower Chances of a Bid
- A Good Old Fashioned Bidding War
- IAG Acquires Air Europa
Sino Oil (702): Possible Jiangxi Jovo Offer
- Troubled coalbed methane play Sino Oil And Gas Holdings (702 HK) is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
- Sino Oil is burdened with a large convertible note and a winding-up petition. Its auditor has disclaimed accounts since 2017 over its ability to continue as a going concern.
- Jiangxi Jovo Energy (605090 CH) is interested in taking more than 50% of Sino Oil (via new shares), but less than 75%. Sino Oil is up >100% in the past month.
AMT/Cellnex: Lower Chances of a Bid
- American Tower stated during FY 2022 results presentation that debt reduction is its main priority. The probability of a takeover bid for Cellnex by American Tower and Brookfield is reduced.
- Cellnex on 14.7x EV/NTM EBITDAe is trading cheaply vs. AMT on 19.5x and below private equity deals at 25-30x. I believe that Cellnex’s fundamentals are solid, and would be long.
- Cellnex is the undisputed European leader in telecommunications towers with both high cash flow visibility (growth forecasted at 18% for the period 2021-2025e) and trading at 7.3% 22e FCF yield.
A Good Old Fashioned Bidding War
- Triton has raised its offer price to €8.95 in cash, 5.3% above the Alternative Consideration of the Bain’s consortium improved offer (vs. my €9.01/share fair value estimate, comps-based).
- Gross spread is +0.78%. It seems that now it is the turn of the Bain’s consortium to make a move, at least match and probably bid over Triton’s offer.
- Bain has the main shareholders on board. As of 24 February, I estimate the paper profits of Triton to be around €31 million (minus the costs of preparing the offer).
IAG Acquires Air Europa
- IAG Presents better than expected Q4 2022 results and announces that it will acquire the remaining 80% of Air Europa for €400 million in a cash and shares deal.
- The purchase price implies valuing 100% of Air Europa at €500 million, which is in line with expectations and is half of the €1,000 million agreed in November 2019.
- Air Europa and IAG finally reach an agreement and clear an uncertainty. It makes strategic sense to create a larger intercontinental hub between Europe and Latin America in Madrid,
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