Vestum: Streamlining continues - ABG

Divests four service-oriented Infra units for SEK 714m consideration
Accelerates transition to higher quality product businesses (now 60% pro forma)
Neutral effect on pro forma cash flows and reduces leverage from 2.8x to 2.3x


Reducing risk and leverage, opening up for more aggressive M&A

Vestum announced that it will divest the four units Hanell Entreprenad i Gävle AB, Marbit AB, FlexiRail AB and Infracon Sverige AB, while also winding down the smaller unit Mälardalens Spår och Anläggning AB (SEK 37m sales SEK -11m EBITA LTM). The units are service-oriented companies with relatively high project risk currently included in the Infrastructure segment (~36% of Infra's LTM EBITA). The net consideration is SEK 714m, corresponding to 7x LTM EBITA. We forecast that the new pro forma EBITA of SEK 468m correspond to a 15% reduction compared to reported LTM EBITA, but that margins for the remaining business will strengthen from 10.0% to 10.5% and that financing cost will be reduced significantly (proceeds will be used to settle SEK 600m bond maturing in Q1'25, bearing STIBOR plus 638bps). Accounting for reduced financing costs, we expect that the divestments will have a limited effect on pro forma cash flows while reducing the leverage from 2.8x to 2.3x. The divestments are expected to close in Q1'25.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/vestum/Equity-research/2024/11/vestum---streamlining-continues/