B4B GY – A Christmas treat – we see +70% upside with a potential catalyst coming up next week
*We have a price target of EUR 15 based on our DCF valuation versus the current offer at EUR 8.48 and see the end of the additional acceptance period on 17th November as a potential catalyst
*Share price been depressed since 14th September when EP Global (Ran by Czech billionaire Kretinsky) launch their zero premium EUR 8.48 offer
*Monday’s price action shows that market is starting to look at the fundamentals again as the stock now trading 1% through terms
*MSCI announcement today excluding B4B GY from the index effective 30th November causing a bit of weakness today – these index events tends to be pre-played up to the effective date meaning the weakness is not just expected for the actual effective day but more spread out
*Kretinsky has been using the March sell-off as an opportunity to get passed the 30% threshold so he can creep higher in an already very discounted name – next disclosure level is 50% and given he has launched a bid he is now free to further increase stake – this means that in case of a further sell-off the price could well be getting further support
*Offer should have gotten rid of ongoing sellers as it has provided an exit opportunity
*B4B has underperformed the Dax by 4% since the offer was announced – and almost 30% since March
*Since the offer was launched B4B GY has released better than expected earnings as the market share gains and the overall Covid-19 resilience after the first rounds of European lockdowns
*Likely that some takeover speculation will continue to be in the name given the creep up optionality that EP Global now has as they have not disclosure requirements between 30-50% and do not need to make another offer (although they of course can launch new offers) – Press has over the last couple years also speculated about potential US buyers for the name
The below 1 year chart relative to CA FP and the DAX highlights the opportunity the sell-off created for Kretinsky in B4B
