European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Applus has long been considered an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers &gt;13x) with no dominant shareholders on the register. Apollo, Apax and I Squared/TDR are circling.</li>
<li>My fair-value estimate ranges from €10.51/share (DCF) to €11.33/share (multiples, applying a discount to more profitable peers). There're two issues regarding a possible LBO: IDIADA contract and debt covenants.</li>
<li>Cost of debt would increase to &gt;4% and the buyer would have to negotiate a temporary increase of covenants to 5x EBITDA (probably in exchange of disposal of O&amp;G business). </li>
</ul>


Applus has long been considered an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers &gt;13x) with no dominant shareholders on the register. Apollo, Apax and I Squared/TDR are circling.
My fair-value estimate ranges from €10.51/share (DCF) to €11.33/share (multiples, applying a discount to more profitable peers). There're two issues regarding a possible LBO: IDIADA contract and debt covenants.
Cost of debt would increase to &gt;4% and the buyer would have to negotiate a temporary increase of covenants to 5x EBITDA (probably in exchange of disposal of O&amp;G business). 


Spain

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

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Applus Services SA (APPS SM)

Take-Private Interest

Applus has been considered for some time an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers above 13x) with no dominant shareholders on...

Jesus Rodriguez Aguilar

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