Merck KGaA: Complementary businesses
NEUTRAL, Fair Value EUR123 vs. EUR115 (-6%)
Yesterday, Merck KGaA announced the acquisition of AZ Electronic Materials for EUR1.9bn plus around EUR238m of net debt. This price corresponds to a premium of 41% over the 3-month volume weighted average price which values the acquisition at 3.2x sales and 10x EBITDA 2012 of the company. Financed 100% in cash, Merck expects to have EUR25m synergies in 2016 with around EUR50m integration costs over 2014-2016. Thus we consider that the deal will immediately be accretive by 4% in 2004 and by 5.5% in 2015. Also, we roll-over to 2014 our DCF method which leads to a Fair Value of EUR123.
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