Two weeks after the Portuguese group Bondalti announced a public takeover bid (takeover bid) for Ercros, the management headed by Antoni Zabalza remains without positioning itself. The proposal by the subsidiary of the José de Mello group to create an Iberian champion of the chemical sector is ambitious, but the price offered does not convince either shareholders or analysts. However, the swords are still raised. Bondalti's offer only needs a group of dissatisfied minorities to open a gap in the shareholding, establish itself as an alternative and take control of the historic company.
Ercros is one of the companies listed on the Continuous Market with the greatest capital dilution among minorities. Practically three quarters of the shareholding is in the hands of holders with less than 0.01%. It is in this magma where Bondalti can fish because, in addition, the river is turbulent. Just before the takeover bid, Ercros was going through a downturn on the stock market due to the negative evolution of the business. In the last 12 months the shares had fallen almost 40%, reaching 2.56 euros per share.
Bondalti's takeover bid offered 3.6 euros per share, which implies a premium of 40% over the current trading price and which increases the value of the chemical group by 329.2 million. The operation is “voluntary” and will be subject to the minimum acceptance of at least 75% plus one share of Ercros' capital to proceed with its delisting. However, the Portuguese group could settle for a smaller but sufficient stake to control the company.
The main shareholders of Ercros are the lawyer Víctor Manuel Rodríguez (6.092%), the investor and proprietary director Joan Casas Galofré (6.015%), his wife Montserrat Garcia Pruns (3.6%) and the North American fund Dimensional Fund (4.99 %). Bondalti could also seek alliances between these reference shareholders to impose an alternative to Zabalza's current management.
The verdict of the reference shareholders is still unknown. Víctor Manuel Rodríguez has publicly expressed that he finds the offer low and has even speculated about a possible improvement. However, the leading investor in the company, who in the past led a rebellion against Zabalza, points out that the entry of Bondalti as a shareholder could help transform the company and generate value.
On the other hand, Joan Casas Galofré decided not to sign the 2023 annual accounts because he considers that the pay out does not comply with the dividend policy agreed with the shareholders. Specifically, he proposed a remuneration of 32.5% to the board of directors, when the demands of the company's second shareholder were to raise it to 50%.
The reason for this discrepancy is that the chemical group closed the year with a profit of 27.6 million, 56% less. With this result, half of the profit could be allocated to dividends. However, the management of Ercros opted for a more prudent remuneration because the recurring result was actually 1.5 million, but the company received a gift from heaven: an extraordinary income of 26.1 million from a ruling by the Constitutional Court on the compensation of negative tax bases.
If the minorities are guided by the analysts' recommendations, Bondalti's takeover bid will not prosper. Mirabaud noted in a report that the takeover bid is 25% below the 2023 highs, and 19% below its target price. In calculation of multiples of gross operating result (ebitda), the offer is between 4 and 4.5 times, when the sector pays between seven and eight times in the United States. For its part, Lighthouse calculates that the real value of the company is 4.7 euros per share; that is, 426.6 million. In a relevant event, the board of Ercros announced a week ago that it will look for a financial and legal advisor to analyze the offer.
Ercros is currently implementing the 3D Plan, a series of investments that will increase its profitability with efficiency and sustainability measures. The group never clearly explained what objectives it was pursuing with this initiative, beyond providing accumulated EBITDA data. Perhaps now is the time to give details, because the alternative proposed by Bonalti of building a reference group in Southern Europe to compete with giants such as Basf, Covestro or Dow may seduce more than one investor.
