Ackermans - EMG takes control over Alfacam

Euro Media Group (EMG) acquires Alfacam for € 25m. No impact on rating/TP.

News:
Financial Newspaper De Tijd mentions that EMG has acquired Alfacam for € 25m. Sofinim (74% AvH) holds a 22.2% stake in EMG.

EMG is European leader in the audiovisual technical services market with presence in France, Belgium, Netherlands, Germany, UK, Switzerland and Italy. The group developed its activity as a technical service provider by aiming to control all the stages of production, from image processing to transmission. EMG realised a FY12 turnover of € 333m and EBITDA of € 76m. The company has a net debt position of € 89m.

Our View:
This move fits perfectly in Ackermans’ strategy to finance acquisitions through cash flows of its operating subsidiaries (AvH holds a transitive stake of 16.4% in EMG) and subsequently leveraging on its knowledge, size and expertise.

We currently value Sofinim’s stake in EMG at € 49m based on EBITDA multiples of 6x. This is Sofinim’s second largest participation (after Hertel Holding) representing 10% of Sofinim’s carrying value. In total, we value Sofinim at € 366m (12% of AvH NAV).

Conclusion:
We estimate NAV at € 89.74 p.s with a 27.64% discount. Our TP of € 77 implies a discount to target equity value of 15.07% and leaves 18.59% upside potential. We advise investors to Buy AvH, based on the solidity of the operating assets and AvH’s ability to paddle successfully through difficult waters. The stock offers clear upside potential for further in-depth value creation while its risk profile remains low. We believe that current trading levels do not yet fully reflect AvH’s earnings potential, which could lead to increased shareholder returns in the form of upped dividends.