Analysts on the stock market believe Ameropa paid at least 821 million lei (almost EUR188 million) to buy 75.87% in Romania’s largest fertilizer maker, Azomures Targu Mures (AZO.RO). Once the deal completed, the Swiss owners have to offer minority shareholders an exit price within three months.
“The final price of the deal might be RON2.5 to RON3. I don’t think the Turks got RON3 because Ameropa has to invest hundreds of millions of dollars into the plant on medium and long-term, the gas price is uncertain and at the time the deal was concluded it was seen as highly risky one,” says Andrei Radulescu, analyst with brokerage firm Broker Cluj.
He says Ameropa most likely paid a premium for Azomures because of its dominant position on the fertilizer market in Romania.
“The deal price might be RON2.1/share plus a premium for Azomures’ size on the local market, where it is the leader. If we take into account the sales multiple of the company, 0.59, its shares seem greatly undervalued so that they should rise 70%. A sales multiple of one is only decent, considering the fertilizer making sector is a mature sector and there shouldn’t be any significant differences from the comparable indicators of other international companies,” Broker Cluj analyst added.
The minimum price analysts see as possible is calculated based on Azomures’ equity capitals at the end 2011, RON1.082 million, i.e. RO2.058/share. A price close to this level may be offered to investors during the tender offer Ameropa is required to conduct on the stock market, as well.
The other two methods provided for in the market regulations that will be considered when setting the offer price are the average price of the last twelve months, which is not good for the stock market investors and a price set by an independent valuation. The final price will be based on the highest value derived from the three methods.
Broker Cluj’s Radulescu agrees the sale price may have been RON2/share using the equity capital criteria, adding another reference to find the price is to use the 2010 profit and take into account a multiple of seven.
While theoretically there should not be any difference between the price paid by Ameropa for the controlling interests in Azomures, and the price paid to the minority shareholders during the tender offer, they might actually differ.
Swiss Capital analysts say the price in Ameropa’s tender offer might be RON2.06 to RON2.55/share.
Azomures stock was trading at RON1.824 on Thursday, 11% below the price estimated based on its equity capitals.
Analysts say the value of harbor operator Chimcomplex Constanta (CHEM.RO), 90% owned by Azomures, whose results are not included in those of its owner, should be factored in the price calculation.
Azomures’s profit rose a great deal in the past year before its Turkish owners sold it, and was ten times higher than they had estimated in early 2011. As a result, it may have pushed the value of the deal up quite a lot, to above the market price. (EUR1=RON4.3718)
(English version by Loredana Fratila-Cristescu)