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.

Investor AB (INVEB SS): Blue Chip Portfolio at a Discount

Event-Driven

<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.

Recipharm AB

Recipharm-EQT Takeout