Securitas acquired Cobelguard, in which AvH held a 39.6% stake. No financial details were disclosed, except AvH will record a limited capital gain upon closing. Since Cobelguard accounts for 0.6% of our NAV, the impact is negligible.
News:
D&S Holding, in which AvH holds a 39.6% stake, agreed in principle to sell its security services businesses (comprising the guarding business of Cobelguard and newly created monitoring centre Be-Marc Cvba) to Securitas. The recently started CIT valuables transport business will not be sold to Securitas, and further developed by the current shareholders of D&S Holding. As the transaction is still subject to the clearance by the Belgian competition authorities (expectedbefore YE11) no further financial details of the transaction will as yet be provided. If the transaction were to be completed as planned, AvH would record a limited capital gain in its consolidated accounts.
The D&S Holding/Cobelguard group realised FY10 turnover of almost € 59m, EBITDA of € 5.1m and EBIT of € 4.3m. Cobelguard employs more than 1,600 security agents in Belgium & Luxemburg, and thereby represents a 12% market share.
Both groups are quite complementary in terms of their geographic coverage and respective client focus, allowing Cobelguard to take advantage of the international scope and full service offering of the Securitas groupin the future. As to management, Steven Van Doorne will be appointed COO of the combined entity upon closing, Dirk Goethals will support the integration as board member, whilst Stefan De Bock will take care of the day-to-day management of the CIT business.
Our View:
The transaction is a bit surprising since Cobelguard was part of the strategy of AvH’s Real Estate pillar ("services around the walls"), but also since it’s the main challenger to Securitas. The press release disclosed no financial details of the transaction, but points to a “limited capital gain” for AvH (upon closing). We currently carry Cobelguard at € 16.3m EUR in our SOTP model, which equals 0.6% of NAV. The deal’s impact is therefore negligible.
Conclusion:
Based on yesterday’s closing prices, we estimate adjusted equity value at € 80.23 with a 31.5% discount. Following the sell-off of the past couple of days, we believe AvH offers very compelling value-for-money, so that we strongly advise to Buy the stock.