European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

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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). 


Applus Services SA

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