Nolato
Nolato - US acquisition in Integrated Solutions (ABG Sundal Collier)
2019-09-16 08:55
Nolato acquires EMC company in the US
Acquisition adds around 2% to group sales
Strengthened US position and reduced HTP dependency
Nolato acquires US-based Ja-Bar Silicone CorporationThe company has sales of around SEK 150m, and will be included in the EMC part of the Integrated Solutions segment (same segment as the heated-tobacco-products). The acquisition will add around 2% to group sales, 4% to Integrated Solutions sales and has good profitability. Purchase price is around SEK 95m. Ja-Bar has a wide range of shielding products in electrically conductive materials and has a very broad customer base, with over 500 customers. Customers include a number of world-leading operators in sectors such as the aerospace, automotive and medical industries.
Strengthening US presence and reducing HTP dependency
We have long expected an acquisition from Nolato, they have previously indicated that the US is an area in which they would like to grow. Due to Heated-Tobacco-Products (HTP) dominance of Integrated Solutions, the acquisition should also help to off-set some of the volatility within the segment. We are overall positive about this acquisition and expect to hear more at the CMD tomorrow
Maintain fair value range: SEK 490 to SEK 580
Our sum-of-the-parts valuation methodology produces a fair value range of SEK 490-580. The share is currently trading at SEK 551 implying 16x ‘19e EV/EBITA. As it currently stands, share volatility is being driven by news relating to e-cigarettes (vape) and we believe the acquisition will help to reduce some of the volatility in the Integrated Solutions segment.
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