Intermoney: Vidrala informed the National Securities Market Commission (CNMV) yesterday afternoon that it has acquired the entire share capital of the Brazilian company Vidroporto. The amount totals €384 million, including the €53 million paid in February for 29% of the company and the debt assumed from Vidroporto. Vidroporto operates two plants in Brazil, one in the northeast and one in the southeast, reaching a market share of >20%. For this year it is expected to generate sales of €160m and EBITDA of €56m (35% margin), a higher margin than Vidrala will have this year (<25%). The acquisition would have been made at a multiple of 6.8x EBITDA (Vidrala currently trades at 7.7x EBITDA) and debt increases to 1.1x dn/pro forma EBITDA (from 0.8x).
It should be remembered that in the glass industry, being a very fragile product, exports do not compensate for logistics costs and if you want to enter a geographical market you have to physically establish yourself there.
Assessment: Positive news, having completed its first operation outside Europe, which will allow it to grow inorganically in an emerging market such as Brazil, with a higher growth potential than in Europe, as well as offering growth opportunities in other regions of Latin America that offer interesting possibilities. Although this was already a done deal, it was not expected before the end of the year, so we expect a positive impact on the share price tomorrow. We keep our recommendation and P.O of Vidrala under review.
