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.

Cerved Group - Castor Srl: Sweet Opportunity in Loans Gone Sour

Trading Above Terms at the Start of the Tender Offer Period

Event-Driven

<p>On 27 August, Castor (the acquisition vehicle of Ion) raised the offer price to <strong>€10.20/share</strong>, a c. 7.4% increase, for a total consideration of €1,976 mn. The minimum threshold condition was raised to a stake of 80% from 50% plus one share and the <strong>tender period</strong> was extended <strong>until 9 September</strong>.</p>
<p>Ion has been pursuing Cerved since Cerved said it was negotiating with PE funds the sale of its credit management division. Ion had snapped Italian banking software provider Cedacri just prior to presenting the first offer for Cerved. The market considers that a combination of the two groups would make industrial sense, although Ion stated it supports Cerved's business plan. Nevertheless, Ion is know for aggressive cost-cutting. In this brinkmanship game between Ion and Cerved, the Board of the latter considers the increased offer insufficient.</p>
<div>
<p>Ion has grown largely via acquisitions and therefore has acted as a consolidator, looking for complementary businesses with which to integrate its services. Ion aims to disrupt the current market by fostering automation in the financial markets and featuring high potential complementarities.</p>
</div>
<div>
<p>Cerved is the third-largest collector of NPLs in Italy, a business that is expected to grow due to  rising bad debts resulting from the aftermath of Covid-19. Ion has been pursuing Cerved since the latter said it was negotiating with PE funds the sale of its credit management division. </p>
<div>
<p>My fair value estimate on a standalone-basis is €11.04/share (DCF based, see <a href="https://www.smartkarma.com/insights/trading-above-terms-at-the-start-of-the-tender-offer-period" target="_blank" data-smartkarma-citation="insights:54546" rel="noopener">Trading Above Terms at the Start of the Tender Offer Period</a>), 8% above the current offer price. Median TP on Capital IQ consensus is €10.4. Gross spread to the increased consideration is 2.3%. Upside could come from an increased offer from Ion. The share is supported by solid fundamentals, although risk could come from business plan execution. Reiterate <strong>long CERV IM</strong>.</p>
</div>
<div>
<div>
<div>
<div>
<div>
<div>
<p></p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

On 27 August, Castor (the acquisition vehicle of Ion) raised the offer price to €10.20/share, a c. 7.4% increase, for a total consideration of €1,976 mn. The minimum threshold condition was raised to a stake of 80% from 50% plus one share and the tender period was extended until 9 September.
Ion has been pursuing Cerved since Cerved said it was negotiating with PE funds the sale of its credit management division. Ion had snapped Italian banking software provider Cedacri just prior to presenting the first offer for Cerved. The market considers that a combination of the two groups would make industrial sense, although Ion stated it supports Cerved's business plan. Nevertheless, Ion is know for aggressive cost-cutting. In this brinkmanship game between Ion and Cerved, the Board of the latter considers the increased offer insufficient.

Ion has grown largely via acquisitions and therefore has acted as a consolidator, looking for complementary businesses with which to integrate its services. Ion aims to disrupt the current market by fostering automation in the financial markets and featuring high potential complementarities.


Cerved is the third-largest collector of NPLs in Italy, a business that is expected to grow due to  rising bad debts resulting from the aftermath of Covid-19. Ion has been pursuing Cerved since the latter said it was negotiating with PE funds the sale of its credit management division. 

My fair value estimate on a standalone-basis is €11.04/share (DCF based, see Trading Above Terms at the Start of the Tender Offer Period), 8% above the current offer price. Median TP on Capital IQ consensus is €10.4. Gross spread to the increased consideration is 2.3%. Upside could come from an increased offer from Ion. The share is supported by solid fundamentals, although risk could come from business plan execution. Reiterate long CERV IM.
















Cerved Group S.p.A.

Castor Raises Bid for Cerved