The takeover bid by I Squared and TDR through Amber EquityCo to Applus is met with rejection by the investment bank, considering that the offer does not adjust to the “real value” of the company. One of the most forceful has been Renta 4, a firm from which they directly advise investors “not to attend” the takeover bid. According to Javier Díaz, an analyst at the firm, one of the main reasons for rejecting this proposal lies in the price set by Amber EquityCo, which is 9.75 euros, 15.2% lower than the theoretical value that the analyst sets for the group of certifications, set at 11.5 euros, and 17.4% below the offer proposed by Apollo.
Although the first is slightly higher than that proposed by the second fund, Díaz criticizes that it maintains “practically unchanged the implicit multiples of the initial offer”, which were already “below” those quoted by the sector. “We must take into account that aplus + presented good semi-annual results, with a slight increase in guidelines for the year as a whole,” he clarifies. The group’s activity is developed around four sectors – energy and industry, automotive, laboratories and Idiada – which allowed it to invoice 111 million, 10.2% more than that registered in the same period of the previous year, in line with the net profit, which rose by 26.4 million, 21.4% year-on-year.
The offer increases pressure on Apollo to improve its offer this summer to 9.5 euros
Around half of its revenue comes from the energy and industrial business, with which it provides non-destructive testing, industrial and environmental inspection services, among others, in more than 60 countries. In this context, Díaz hides behind the “historical multiples” of Applus itself to argue that it is an “insufficient” offer, which although the pressure increases on Apollo to improve the initial offer, they rule out it ever exceeding 10 .euros per share.
However, it would serve to boost Applus’s price, which has accumulated a revaluation of more than 50% in the year, up to 1,200 million. In any case, Díaz insists that the resolution of the concession of Ideada, the Applus subsidiary, which will be known in the first half of next year, leaves in the air whether it is possible that the funds can improve the takeover bids. ”If they renewed the concession, Applus would be worth much more. It is the main catalyst for the company,” says Javier.
After the loss of interest on the part of Brookfield and the withdrawal of the Apax fund, which withdrew from the playing field, Apollo and TDR together with ISQ are now facing each other to take over Applus. ”In my opinion, it is practically impossible for another fund to enter. I still believe that from 11.50 euros, they could stay at 10.50 euros. Although it is difficult due to the associated risk of non-renewal of Idiada. The key is in the resistance of 10 euros per share, a ceiling that, if broken, can help it return to the range in which it fluctuated before the coronavirus.
Díaz is placed at the top of the media, since the ‘Bloomberg’ consensus gives this value a target price of 10.97 euros, around 11% above the market closing price this Thursday. With all this, the attractiveness is losing steam in the eyes of analysts and purchase recommendations are at six-year lows, with almost six out of ten analysts betting on including it in their portfolio. The positive note is that it does not have any sales advice.
The ‘counter takeover’ strengthens Applus’s price
Applus’s price shot up 4.39% at the close of trading this Thursday, to 9.87 euros per share, after learning of the ‘counter takeover’ launched by Amber, at a price of 9.75 euros per share . The announcement of the counteroffensive was known before the market opened. ISQ and TDR, through Amber EquityCo, improved Apollo’s takeover bid by raising the offer to 9.75 euros. The new voluntary offer amounts to 1,258 million, which would be paid in cash, reports the National Securities Market Commission.
According to the CNMV, at this time, applus does not have a majority shareholder. The entity’s capital is divided between companies such as JP Morgan with 8.6%, Morgan Stanley with 6.6%, DWS 5.3%, Southeastern Asset Management 5.1%, Samson Rock Capital 4.9% , Barclays 4.6% and Banco Santander 4%.
