European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Event-Driven

On 20 February, Nuova Argo Finanziaria S.p.A. made a <a href="https://www.astm.it/wp-content/uploads/2021/02/NAF-2-102-Notice.pdf" target="_blank" rel="noopener">Voluntary Tender Offer</a> to acquire a 41.3% stake in <a href="https://www.smartkarma.com/entities/astm-spa" target="_blank" data-smartkarma-citation="entities:21156:1" rel="noopener">ASTM SpA (AT IM)</a> for €1.7 bn with the aim of taking it private and delisting it.
<ul>
<li>Nuova Argo Finanziaria (NAF) said during the weekend it would offer €25.60 a share in cash.</li>
<li>The price represents a premium of 28.8% to the last trading session.</li>
<li>The offeror and related parties hold already a 51.061% stake in ASTM; and ASTM holds a 7.645% stake in treasury.</li>
<li>Post completion ASTM S.p.A will be delisted.</li>
<li>Shares in ASTM jumped 27.3% on Monday, and traded today between €25.44 and €25.68, with over €91 mn traded at the time of publishing this insight.</li>
</ul>
As of H1 2020, ASTM managed a motorway network of approximately 4,594 km, which included 1,423 km network in Italy, as well as 3,171 km located internationally. This represented 45.5% of 2019 revenue, and 92.9% of 2019 EBITDA.
The offer price is not particularly generous.
<ul>
<li>On a DCF basis (using Capital IQ consensus), TP is €26.60 per share, c. 3.9% above the offer price.</li>
</ul>
The deal seems opportunistic as the price offered is well below where the company was trading before the onset of the pandemic.
<ul>
<li>The offeror bets on a recovery of the Italian and Brazilian economies, with ASTM reaching a 16% revenue growth and 63% EPS growth for 2021E (vs. 2020E).</li>
<li>Considering the premium offered, it is highly likely to that the deal go through, in my view.</li>
<li>Shareholders can oppose the deal (90% minimum threshold to delist) and seem to be expecting a bump.</li>
<li>The shares are trading tight to terms, €25.64 vs an offer price of €25.6.</li>
</ul>
(This Insight is labelled bearish as ASTM is trading tight to terms).

On 20 February, Nuova Argo Finanziaria S.p.A. made a Voluntary Tender Offer to acquire a 41.3% stake in ASTM SpA (AT IM) for €1.7 bn with the aim of taking it private and delisting it.

Nuova Argo Finanziaria (NAF) said during the weekend it would offer €25.60 a share in cash.
The price represents a premium of 28.8% to the last trading session.
The offeror and related parties hold already a 51.061% stake in ASTM; and ASTM holds a 7.645% stake in treasury.
Post completion ASTM S.p.A will be delisted.
Shares in ASTM jumped 27.3% on Monday, and traded today between €25.44 and €25.68, with over €91 mn traded at the time of publishing this insight.

As of H1 2020, ASTM managed a motorway network of approximately 4,594 km, which included 1,423 km network in Italy, as well as 3,171 km located internationally. This represented 45.5% of 2019 revenue, and 92.9% of 2019 EBITDA.
The offer price is not particularly generous.

On a DCF basis (using Capital IQ consensus), TP is €26.60 per share, c. 3.9% above the offer price.

The deal seems opportunistic as the price offered is well below where the company was trading before the onset of the pandemic.

The offeror bets on a recovery of the Italian and Brazilian economies, with ASTM reaching a 16% revenue growth and 63% EPS growth for 2021E (vs. 2020E).
Considering the premium offered, it is highly likely to that the deal go through, in my view.
Shareholders can oppose the deal (90% minimum threshold to delist) and seem to be expecting a bump.
The shares are trading tight to terms, €25.64 vs an offer price of €25.6.

(This Insight is labelled bearish as ASTM is trading tight to terms).

ASTM SpA - Nuova Argo Finanziaria Takeout Offer, Trading Tight