(Boursier.com) — Against the tide, Sopra Steria fell 3% to 184.1 euros after the announcement of the acquisition of the Dutch Ordina for 518 million euros. The digital services company agreed to pay 5.75 euros per Ordina share to afford its target, materializing a premium of 36% on the closing price of Ordina on March 14. An operation carried out entirely in cash, which will be financed entirely with the group’s cash and existing credit facilities. The merger of the two entities will lead to significant complementarities both from a commercial and operational point of view, says the French firm. Sopra Steria anticipates an accretive impact on earnings per share from the first year (+1.2% in 2024) then 3.7% in 2025.
The combined operations, comprising Sopra Steria’s existing activities in BeNeLux, its recent acquisition of Tobania (completed in March 2023) and Ordina will create a partner of choice in digital services in the region with a pro forma turnover of 700 million euros and more than 4,000 employees split almost equally between the Netherlands and Belgium. In Luxembourg, the group would reach a strategic size of 300 employees. Sopra Steria’s objective is to expand its activities in Europe to develop its market share in geographical areas where there is significant growth potential.
The planned acquisition would also contribute to the balance of Sopra Steria’s geographic portfolio. On a pro forma basis, the company’s turnover including Ordina would break down as follows: 39% in France, 15% in the United Kingdom, 11% in BeNeLux, 8% in Scandinavia, 7% in Germany, 8% in the rest of Europe and 12% in software. The offer is subject to certain customary conditions and is expected to be finalized in the fourth quarter of 2023. Sopra Steria intends to remove Ordina from Euronext Amsterdam as soon as possible after the completion of the offer.
The proposed price shows a multiple of 12x EV/EBIT 2024e, which is globally in the average of the multiples observed for this type of operation, notes Oddo BHF (‘outperform’). After taking into account synergies, the multiple comes out at 10x EV/EBIT 2024e. Some might consider the acquisition multiples too high compared to Sopra Steria’s current multiple (7x EV/EBIT fwd 12 months), which could lead to a one-off drop in the stock today, specifies the broker. However, the latter considers this operation positive for the title because the price paid seems reasonable after synergies and in view of the strategic interest of the target. With such an operation, Sopra Steria will become a major player in the Benelux zone, which should enable it to implement the same strategy as in France and gradually achieve margins of more than 10% in the zone.
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