BOL announced that it has entered into exclusive negotiations to sell its Transport and logistics business to CMA-CGM for €5bn (on a cash free/ debt free basis).
In addition, BOL announced that it would increase the consideration of its partial tender by €0.25 conditional on closing of this transaction on the announced terms.
“a contingent €0.25 earn-out per Bolloré SE share if the CMA CGM offer for the acquisition of Bolloré Logistics leads to the sale of the latter in accordance with the transaction terms to be agreed”.
1/ Consequences for Bollore partial tender
If post transactions, BOL goes back to trading at a 37% discount to its NAV, it would imply a price of €5.7 according to our NAV (section 4 below).
The discount might actually tighten as 16% of BOL’s NAV will be cash that will be used to enhance value without any doubt.
BOL at a 32% discount instead of 37% would imply a BOL price of €6.15.
This transaction clearly creates much more value than the €0.25 additional conditional consideration which barely accounts for the market performance since announcement.
Indeed, since the announcement of the partial tender, the SXXP is up 4.4% and when applied to the undisturbed €5.13 BOL price represents €0.22 of value creation.
Now the additional consideration is conditional on the deal closing with a final decision relatively soon on May 08th.
It is very likely the transaction and due diligence are well advanced for them to mention a date so close and having already considered the consequences for the partial tender offer.
The take-up of the partial tender offer might not be as good as initially expected as there does not seem to be much upside for shareholders to tender.
2/ Consequences for Vivendi
- BOL would end up with €4.2bn cash in hands post Logistics transaction
- A mandatory offer post OPRA at E11.8 would cost him 2.6bn
- The key question is whether Bollore is going to play games and delay. From September (cancellation of VIV treasury shares), he will have 6 months to decide whether to:
- Make a mandatory bid at the same price as the OPRA post OPRA (which should be at a significant premium otherwise it is useless)
- Make a low-ball mandatory offer before an OPRA and creep up its stake up to 50%
- Sell below 30%...
If anything, this morning’s announcement increases the likelihood of scenario 1.
Increasing its stake and launching a mandatory at such discount to Vivendi makes sense from a financial standpoint but with Bollore you never know what the path to completion might be.
3/ Bollore Cash position
We assume 20% capital gain taxes on the sale of Bollore logistics (which might be very conservative knowing how Bollore usually optimise fiscality)
Bollore would be long €4.2bn of cash post transactions and have significant further cash capacity when including the value of its UMG stake.
The consideration for a Vivendi mandatory offer at €11.8 / share (post OPRA) would represent 63% of its cash position.
4/ Bollore discount to NAV post transactions
Post the partial offer at €6.0 (assuming 100% take-up) and the sale of the logistics business for €5bn less 20% capital gain taxes, BOL would be trading at a 33% to its NAV.
Laurent Chekroun Equity Sales
Makor Securities London Ltd. | Makor Group
E: LCHEKROUN@makor-cm.com
M: +41 79 350 71 09
O: +33 1 42 33 02 05
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