According to the Belgian business newspaper ‘De Tijd’, Arseus has been approached as a take-over target. The process is said to be in a very early stage.
According to the article, one or more investment funds approached the company. The CEO is said to have declined to comment but did not deny it either.
Our View:
The process is still in an early phase, so no price or offer terms are set. If a party would be interested in taking-over Arseus, we indeed expect this to be a private equity player orother investment funds, because the four divisions within the group may be too diverse to be of interest to an industrial party.
Although very speculative at this moment, we would not exclude a scenario whereby part of the business would be sold. Indeed, Arseus’ management has made no secret in the past that divisions such as Medical and Dental could be divested, thereby freeing up resources for the buy&build strategy of Fagron. We remind investors that Arseus has a very high debt level (net debt/rebitda at half year of 3x, not including the funds needed to pay for recent the Brazilian Pharma Nostra acquisition). Hence, deleveraging the balance sheet is the only option if the company wants to continue acquiring new targets.
Conclusion:
It is too early to start speculating on Arseus being in take-over discussions. On the other hand, De Tijd was also the newspaper that made the (34,43 EUR, 0,38%) – Waterland deal public, indicating the strength of their sources.
Buy rating and € 13/share TP maintained.