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Recordati the title stands out from the current at Piazza Affari with a 3.43% increase to 31.06 euros, thanks to Goldman Sachs who promoted it to neutral in the # Purchase, also bearing the target price of € 31 to € 36. In the report, after several weeks of speculation, the CVC fund announced (on June 29) the acquisition of the entire Recordati family (holding 52.5%) for $ 3 billion. Euros
The offered price of 28 euros per share, which implies a discount of about 20% compared to the closing price, has clearly surprised investors, with the underperforming securities (-10 % vs. + 2% of the SXDP index), CVC is obliged to launch a mandatory public offering on the remainder of the equity index and in any case has stipulated that Recordati will remain a publicly traded company
But for Goldman Sachs Recordati it is worth more than 28 euros per share. "Our business valuation based on organic growth is € 29.6 per share, or 5% more than the price offered by CVC," reads the report of the investment bank. US on an acceleration of the M & A strategy represented an upside risk for earnings and the company's return prospects
"Now the private equity fund having an investment horizon defined has taken control of the group, baduming the conclusion of the agreement that an accelerated mergers and acquisitions strategy is a realistic possibility for the company, we now incorporate a risk-weighted contribution of 39, a strategy of mergers and acquisitions in our new target price, "say the experts of Goldman Sachs.
Recordati is interested in the French activity of counter-drugs Bristol-Myers Squibb An acc ord that could be worth more than a billion, according to what they reported on July 5 to Reuters sources close to the negotiations. Apparently Deutsche Bank and Jefferies are working for an auction that will begin after the summer. Among the bidders, the German Stada, financed by the Bain and Cinven funds, the French Zentiva, which was sold this year to the private equity fund Advent, and American companies such as Mylan and Procter & Gamble
. Goldman Sachs, the acquisitions played an important role in the transformation of Recordati from a primary care-oriented company in Italy to a globally diversified entity with a presence in the field of orphan diseases with high margin. Over the past five years, M & A activity has been limited to the primary care / specialty segment, accounting for approximately 85% of the group's business turnover in 2017, contributing 80% to sales growth of the segment over the 2013-2017 period.
Recordati's acquisitions were made at a multiple medium enterprise value / sales of 2.2 times with a maximum of 3.4 time in the case of Orphan Europe in 2007, well below the average multiples at which he handled (4 times) in this period. "Now, we badume that all future M & A transactions will take place at a multiple goal of 3.5 times the EV / sales, which, as a sensitivity, each 0.5 times increase in the multiple of the same. acquisition involves a M & A risk remains for Goldman Sachs badysts a key element of Recordati's strategy the company currently focusing on acquisitions "a la carte"., financed by the reinvestment of free cash flow . Analysts also estimated that Recordati's profit margins improved by about 20pp. "This consistent mineral business, coupled with strong execution: strictly controlled costs, was one of the main drivers of the 1000 basis point increase in the EBIT margin for the segment Primary / Specialized Care Until 2013-2017, "notes Le Not to mention that historically, Recordati has invested heavily below its commitments. "Despite the good returns generated by M & A transactions, the company has historically remained under-leveraged, with net debt / EBITDA averaging 0.4 times compared to 2007-2017, well below triple leverage" [19659005] The new 12-month target price, based on a combination of organic growth and inorganic growth scenarios, is 36 euros (up about 20% from the current price). short-term risk / return perspective favorable, given the offered price of 28 euros and the support that it is likely to provide, "concludes badysts Goldman Sachs.
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