European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Greiner persisted it its protracted hostile takeover battle, but Recticel found a white knight to which it sold the business Greiner was interested in. The lowball bid failed, as expected.</li>
<li>Greiner is selling a 22.6% stake to Baltisse, a family office, with a small capital gain. Greiner still has a 4.4% stake, and Baltisse could be a buyer again.</li>
<li>Now Recticel is a much smaller insulation player, with a sizable proforma net cash position. My fair value estimate (DCF) is €20.21/share, which represents a 15% upside.</li>
</ul>


Greiner persisted it its protracted hostile takeover battle, but Recticel found a white knight to which it sold the business Greiner was interested in. The lowball bid failed, as expected.
Greiner is selling a 22.6% stake to Baltisse, a family office, with a small capital gain. Greiner still has a 4.4% stake, and Baltisse could be a buyer again.
Now Recticel is a much smaller insulation player, with a sizable proforma net cash position. My fair value estimate (DCF) is €20.21/share, which represents a 15% upside.


Greiner Fails and Sells Stake in Recticel to a New Reference Shareholder

Greiner AG is intensifying its battle to acquire <a href="https://www.smartkarma.com/entities/recticel-sa" target="_blank" data-smartkarma-citation="entities:33316:1" rel="noopener">Recticel SA (REC BB)</a>.
<ul>
<li>On 14 May, Greiner <a href="https://www.greiner.com/en/newsroom/greiner-ag-agrees-to-acquire-a-2703-stake-in-recticel-sa/" target="_blank" rel="noopener">communicated that it had reached a preliminary deal</a> to acquire a 27.03% stake in Recticel from Compagnie du Bois Sauvage SA (COMB BB), for a total of €203.8 mn, subject to conditions.</li>
<li>Both Compagnie du Bois Sauvage and Recticel were halted from trading on Friday, pending statements.</li>
<li>The purchase price is €13.5/share, post dividend distribution of €0.26.</li>
<li>
For an implied equity value (fully diluted) of €778.6 mn and an implied EV of €798.4 mn (dividend adjusted).
</li>
<li>
This represents 7.1x EV/21e EBITDA and 18.5x Fwd P/E.
</li>
</ul>
As for the timing, Recticel is holding an AGM on 25 May AGM, which will be followed by an EGM in which the Board will ask shareholders permission to issue more warrants (representing up to 25% of the shares now issued). Interestingly, Greiner intends to maintain Recticel’s listing on Euronext Brussels.
Based on my DCF calculations, my implied per share value is €18.71, a 38.6% discount to the prospective offer. Therefore, I believe the prospective offer price undervalues Recticel.
On a comparables basis (median EV/Fwd EBITDA), the implied price per share is €23.62. ING says the offer significantly undervalues Recticel, and it values the remaining shares at €23.5-25. Other issues is that we do not have any visibility in either Greiner's balance sheet (more specifically whether it will be able to fund any increase to the offer price) or the level of synergies.
I believe that Recticel's Board will fight, as it has done before, and it will not let the company get snapped cheaply. On the other hand, the 27% stake that Greiner is planning to acquire will act as a deterrent to other potential bidders. The shares are on an upward trajectory, trading c. 5% above the prospective offer price, thus I believe the downside risk is limited. Recommendation is long REC BB, TP €18.71.

Greiner AG is intensifying its battle to acquire Recticel SA (REC BB).

On 14 May, Greiner communicated that it had reached a preliminary deal to acquire a 27.03% stake in Recticel from Compagnie du Bois Sauvage SA (COMB BB), for a total of €203.8 mn, subject to conditions.
Both Compagnie du Bois Sauvage and Recticel were halted from trading on Friday, pending statements.
The purchase price is €13.5/share, post dividend distribution of €0.26.

For an implied equity value (fully diluted) of €778.6 mn and an implied EV of €798.4 mn (dividend adjusted).


This represents 7.1x EV/21e EBITDA and 18.5x Fwd P/E.


As for the timing, Recticel is holding an AGM on 25 May AGM, which will be followed by an EGM in which the Board will ask shareholders permission to issue more warrants (representing up to 25% of the shares now issued). Interestingly, Greiner intends to maintain Recticel’s listing on Euronext Brussels.
Based on my DCF calculations, my implied per share value is €18.71, a 38.6% discount to the prospective offer. Therefore, I believe the prospective offer price undervalues Recticel.
On a comparables basis (median EV/Fwd EBITDA), the implied price per share is €23.62. ING says the offer significantly undervalues Recticel, and it values the remaining shares at €23.5-25. Other issues is that we do not have any visibility in either Greiner's balance sheet (more specifically whether it will be able to fund any increase to the offer price) or the level of synergies.
I believe that Recticel's Board will fight, as it has done before, and it will not let the company get snapped cheaply. On the other hand, the 27% stake that Greiner is planning to acquire will act as a deterrent to other potential bidders. The shares are on an upward trajectory, trading c. 5% above the prospective offer price, thus I believe the downside risk is limited. Recommendation is long REC BB, TP €18.71.

Greiner/Recticel: Two-Year Old Takeover Battle

Belgium

Recticel SA manufactures a wide range of foams and synthetic compounds. The products are mainly used in the automotive industry for car seats and innovative and high-quality interior trim, in the bedding sector for mattresses and slat bases, and in the building and industrial sector for insulation equipment and material. Most of the company's research is devoted to the automotive sector.

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Recticel SA (REC BB)

Greiner Fails and Sells Stake in Recticel to a New Reference Shareholder

Following the incoming exit from technical foams, Recticel will become a much smaller insulation player, with a sizable net cash position that will...

Jesus Rodriguez Aguilar

Greiner/Recticel: Two-Year Old Takeover Battle

I believe that Recticel's Board will fight, as it has done before. The shares are on an upward trajectory and I believe the downside risk is...

Jesus Rodriguez Aguilar

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