European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<p>Finally, both parties avoided taking the public backlash to new highs (on the Suez AGM). On 12 April, <a href="https://www.smartkarma.com/entities/veolia-environnement-sa" target="_blank" data-smartkarma-citation="entities:21568:1" rel="noopener">Veolia Environnement SA (VIE FP)</a> and <a href="https://www.smartkarma.com/entities/suez-sa" target="_blank" data-smartkarma-citation="entities:21546:1" rel="noopener">Suez (SEV FP)</a> publicly smoked the peace pipe by <a href="https://www.veolia.com/sites/g/files/dvc4206/files/document/2021/04/PR-Agreement-Veolia-Suez-EN.pdf" target="_blank" rel="noopener">announcing an agreement</a> on the key T&amp;Cs of a merger to create the "World Champion of Ecological Transformation" (a global water and waste giant), with aggregate proforma revenues of €37 bn.</p>
<ul>
<li>
<p>The <strong>offer price</strong> is <strong>increased</strong> from €18 per share <strong>to €20.5 per share</strong>.</p>
</li>
<li>
<p>Veolia has committed funds to complete the transaction, which will be financed by a bridging loan with a banking syndicate.</p>
</li>
<li>
<p>Both parties have agreed to enter into definitive merger agreements by 14 May.</p>
</li>
<li>
<p>Veolia share price increased by 9.7%, whilst that of Suez increased by 7.7%.</p>
</li>
<li>
<p>Engie, controlled by the French State, will receive compensation for the improvement of the purchase offer.</p>
</li>
</ul>
<p>The improved offer represents:</p>
<ul>
<li>1.5x EV/Fwd revenue, <strong>8.1x EV/EBITDA</strong> and <strong>27.4x Fwd P/E</strong>.</li>
<li>an implied EV of €25,574 mn and implied equity value of €13,103.6 mn.</li>
<li>€3.2 bn more than the first offer; in spite of that, Veolia's 5-year CDS has barely moved.</li>
</ul>
<p>To avoid competition problems with regulators, a large part of the French assets-and others in Italy, Asia and Africa will be segregarded in a new society, which will not be part of the resulting group. This new company, whose assets will be acquired by the Galus Funds Ardian and Meridiam, GIP, and the Public Bank Caisse des Dépôts, among others, will have a turnover about €7 bn.</p>
<p>The rationale is of the merger is to create a "super French champion" in rising markets such as recycling or energy production based on waste or water resources (fragmented markets), which will have the economic support of new world plans in infrastructures and the impulse of the energy transition.</p>
<p>Suez has had a good run and I have been long since the outset. Now after two price increases, a PR offensive, and 32% gain over the initial price, this offer should be considered final. </p>
<p>With this agreement, Veolia culminates an integration plan that it began last summer, when it acquired a 29.9% stake in Suez from Engie (at €15.5, then revised to €18.0) and which, since then, Suez had resisted. The stake of Veolia in Suez bars any interloper attempt.</p>
<p>This is a rock solid trade, albeit the <strong>gross spread</strong> is an <strong>unexciting 3.2%</strong> on a deal that may take up to a year from now to close. <strong>Long TP €20.5</strong>, and monitor to add on any dip.</p>

Finally, both parties avoided taking the public backlash to new highs (on the Suez AGM). On 12 April, Veolia Environnement SA (VIE FP) and Suez (SEV FP) publicly smoked the peace pipe by announcing an agreement on the key T&amp;Cs of a merger to create the "World Champion of Ecological Transformation" (a global water and waste giant), with aggregate proforma revenues of €37 bn.


The offer price is increased from €18 per share to €20.5 per share.


Veolia has committed funds to complete the transaction, which will be financed by a bridging loan with a banking syndicate.


Both parties have agreed to enter into definitive merger agreements by 14 May.


Veolia share price increased by 9.7%, whilst that of Suez increased by 7.7%.


Engie, controlled by the French State, will receive compensation for the improvement of the purchase offer.


The improved offer represents:

1.5x EV/Fwd revenue, 8.1x EV/EBITDA and 27.4x Fwd P/E.
an implied EV of €25,574 mn and implied equity value of €13,103.6 mn.
€3.2 bn more than the first offer; in spite of that, Veolia's 5-year CDS has barely moved.

To avoid competition problems with regulators, a large part of the French assets-and others in Italy, Asia and Africa will be segregarded in a new society, which will not be part of the resulting group. This new company, whose assets will be acquired by the Galus Funds Ardian and Meridiam, GIP, and the Public Bank Caisse des Dépôts, among others, will have a turnover about €7 bn.
The rationale is of the merger is to create a "super French champion" in rising markets such as recycling or energy production based on waste or water resources (fragmented markets), which will have the economic support of new world plans in infrastructures and the impulse of the energy transition.
Suez has had a good run and I have been long since the outset. Now after two price increases, a PR offensive, and 32% gain over the initial price, this offer should be considered final. 
With this agreement, Veolia culminates an integration plan that it began last summer, when it acquired a 29.9% stake in Suez from Engie (at €15.5, then revised to €18.0) and which, since then, Suez had resisted. The stake of Veolia in Suez bars any interloper attempt.
This is a rock solid trade, albeit the gross spread is an unexciting 3.2% on a deal that may take up to a year from now to close. Long TP €20.5, and monitor to add on any dip.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>Yesterday's AFR reported a consortium led by Aussie PE outfit CPE Capital had made a $2bn+ Offer for waste collections and recycling group <a href="https://www.smartkarma.com/entities/bingo-industries-ltd" target="_blank" data-smartkarma-citation="entities:24067:1" rel="noopener">Bingo Industries (BIN AU)</a>.</p>
<p>Earlier today Bingo <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02331570-2A1275617?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed</a> an unsolicited, highly conditional, non-binding, indicative proposal, from funds advised by CPE, which includes Macquarie Group’s infrastructure arm Macquarie Infrastructure and Real Assets (MIRA), by way of a Scheme, with an indicative cash price of $3.50/share.</p>
</div>
<p>The proposal also references a scrip alternative that remains under development, which would provide shareholders with the option of a mix of cash and scrip at a lower upfront price than a simple cash option.</p>
<p>Conditions include due diligence and financing, with a minimum/maximum acceptance condition attached to the cash and scrip options. </p>
<p>Discussions between both parties remain ongoing.</p>
<div>
<p>More below the fold.</p>
</div>


Yesterday's AFR reported a consortium led by Aussie PE outfit CPE Capital had made a $2bn+ Offer for waste collections and recycling group Bingo Industries (BIN AU).
Earlier today Bingo confirmed an unsolicited, highly conditional, non-binding, indicative proposal, from funds advised by CPE, which includes Macquarie Group’s infrastructure arm Macquarie Infrastructure and Real Assets (MIRA), by way of a Scheme, with an indicative cash price of $3.50/share.

The proposal also references a scrip alternative that remains under development, which would provide shareholders with the option of a mix of cash and scrip at a lower upfront price than a simple cash option.
Conditions include due diligence and financing, with a minimum/maximum acceptance condition attached to the cash and scrip options. 
Discussions between both parties remain ongoing.

More below the fold.


Bingo Industries (BIN AU): CPE/MIRA's Scavenger Hunt

<div>According to the AFR, a consortium led by Aussie PE outfit CPE Capital (previously
<div>known as CHAMP Private Equity) <span>has made a $2bn+ Offer for waste collections and recycling group </span><a href="https://www.smartkarma.com/entities/bingo-industries-ltd" target="_blank" data-smartkarma-citation="entities:24067:1" rel="noopener">Bingo Industries (BIN AU)</a><span>.</span>
</div>
</div>
<div></div>
<div>CPE is no stranger to Bingo, having acquired its Banksmeadow processing facility in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02150926-2A1175219?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">October 2019</a>, a divestment <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2995-02081134-2A1135804?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">required by the ACCC</a> after Bingo acquired Dial A Dump in February of that year.</div>
<div></div>
<div>
<div>The key hurdle to a successful tilt is Bingo's current valuation - 15.9x EBITDA and 41x PER on a forward basis is not by any stretch, a cheap proposition.  </div>
</div>
<div></div>
<div>More below the fold.</div>

According to the AFR, a consortium led by Aussie PE outfit CPE Capital (previously
known as CHAMP Private Equity) has made a $2bn+ Offer for waste collections and recycling group Bingo Industries (BIN AU).



CPE is no stranger to Bingo, having acquired its Banksmeadow processing facility in October 2019, a divestment required by the ACCC after Bingo acquired Dial A Dump in February of that year.


The key hurdle to a successful tilt is Bingo's current valuation - 15.9x EBITDA and 41x PER on a forward basis is not by any stretch, a cheap proposition.  


More below the fold.

Bingo Industries (ASX: BIN): Talking Trash

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

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<p>In the next Smartkarma Webinar, we will be joined by Buyside Portfolio Manager <a href="https://www.linkedin.com/in/susanta-mazumdar-b61a8a85/?originalSubdomain=sg" target="_blank" rel="noopener">Susanta Mazumdar</a> who will discuss 5 key themes and 7 high-conviction ideas in Asian Infrastruture stocks post the COVID-selloff. The webinar will be held on Wednesday 6 May 2020 at 1700hrs Singapore/Hong Kong time.</p><hr><div><div><div class="content-highlight"><h2>
<a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=88073112792" target="_blank" rel="noopener">Register for the Webinar here</a>.</h2></div></div></div><hr><div><p>Susanta Mazumdar has a career spanning 27 years focussing on infrastructure and infrastructure related sectors.</p></div><p>He has worked across global investment houses such as T Rowe Price and Invesco, and more recently as the founder of JN Asian Infrastructure Fund.<br><br>Having covered this space for nearly three decades, Sustanta knows how to spot a good opportunity!</p>

In the next Smartkarma Webinar, we will be joined by Buyside Portfolio Manager Susanta Mazumdar who will discuss 5 key themes and 7 high-conviction ideas in Asian Infrastruture stocks post the COVID-selloff. The webinar will be held on Wednesday 6 May 2020 at 1700hrs Singapore/Hong Kong time.
Register for the Webinar here.Susanta Mazumdar has a career spanning 27 years focussing on infrastructure and infrastructure related sectors.He has worked across global investment houses such as T Rowe Price and Invesco, and more recently as the founder of JN Asian Infrastructure Fund.  Having covered this space for nearly three decades, Sustanta knows how to spot a good opportunity!

Smartkarma Webinar | High-Conviction Ideas in Asian Infrastructure Stocks

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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Morningstar, Inc.

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Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<p>Following the release of scheme documents, and with shares now trading ex interim dividend of AUD 5 cents, we lower our fair value estimate slightly for no-moat <a href="https://www.smartkarma.com/entities/12769" target="_blank" data-smartkarma-citation="entities:12769:1">Tox Free Solutions Ltd (TOX AU)</a> to match the proposed AUD 3.425 per share all-cash acquisition offer from <a href="https://www.smartkarma.com/entities/19885" target="_blank" data-smartkarma-citation="entities:19885:1">Cleanaway Waste Management Limited (CWY AU)</a>. Payment will comprise a AUD 0.58 per share fully franked special dividend and scheme consideration of AUD 2.845 per share. Our underlying fair value estimate of AUD 2.30, were Tox to…</p>

Following the release of scheme documents, and with shares now trading ex interim dividend of AUD 5 cents, we lower our fair value estimate slightly for no-moat Tox Free Solutions Ltd (TOX AU) to match the proposed AUD 3.425 per share all-cash acquisition offer from Cleanaway Waste Management Limited (CWY AU). Payment will comprise a AUD 0.58 per share fully franked special dividend and scheme consideration of AUD 2.845 per share. Our underlying fair value estimate of AUD 2.30, were Tox to…

Corporate Action: Vote in Favour of the Solution to Cleanaway Tox Free Shares

Australia

Transpacific Industries Group Ltd. provides integrated industrial cleaning and waste management solutions to customers across Australia and New Zealand. The Company also imports and distributes heavy-duty commercial vehicles.

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Cleanaway Waste Management (CWY AU)

Suez - Veolia: Peace Pipe

After two offer price increases (over 32% vs initial offer), this agreement should be considered final and a rock solid trade, albeit an unexciting...

Jesus Rodriguez Aguilar

Bingo Industries (BIN AU): CPE/MIRA's Scavenger Hunt

Trading at a gross/annualised spread of 6.0%/15.4% assuming five months to complete, when factoring in DD. That looks tight for what is a non...

David Blennerhassett

Bingo Industries (ASX: BIN): Talking Trash

There is - at the time of writing - no ASX announcement as to an Offer from CPE. But the AFR typically has the inside track on deals. For that...

David Blennerhassett

Smartkarma Webinar | High-Conviction Ideas in Asian Infrastructure Stocks

In the next Smartkarma Webinar, we will be joined by Buyside Portfolio Manager Susanta Mazumdar who will discuss 5 key themes and 7 high-conviction...

Smartkarma Research

Corporate Action: Vote in Favour of the Solution to Cleanaway Tox Free Shares

Following the release of scheme documents, and with shares now trading ex interim dividend of AUD 5 cents, we lower our fair value estimate...

Morningstar, Inc.

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