Indra has bought 52.7% of Tecnocom 4.25/share, which represents a 12% premium over yesterday's closing price (28 Nov) and 28% over the weighted average price of the last three months. It has also launched a takeover bid for Tecnocom's 100%.
The price of the takeover bid will be €4.25/share. The acquisition will be paid 60% in cash and 40% in Indra shares valued at €9.8461 (average of the last five days). This brings Tecnocom's equity valuation to €305M. The company expects to close the transaction in the second quarter of 2017.
"The price is high compared to the sector. However, Indra intends to expand its strategic positioning and increase share by achieving synergies and these synergies are valued at between €35M and €40M" says Diego Gutiérrez, corporate finance expert at Abra-Invest.
The sum of both entities, with pre-synergies data for the last twelve months to September 2016, will result in a company with revenues of €3,147M, recurring EBITDA of €243M and recurring EBIT of €165M (EBIT margin of 5.21TP1Q).
In terms of indebtedness it is manageable as "it would bring the net financial debt/EBITDA ratio to levels of 2.5 times and always below 3 times even with integration costs.
In addition, Indra will gain size with virtually no dilution of 2017 earnings per share estimates.
A few days ago, we wrote about Tecnocom's good performance on the stock exchange. With an annual revaluation that far exceeds 200%, it is one of the three stocks that are on the podium of the most profitable on the Spanish Stock Exchange this year 2016. In Monday's session, before the news of the takeover, Tecnocom shares soared 13%, yesterday they rose 5%.
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