Tighter family control and goodwill impairment
Tighter family control and goodwill impairmentSHAREHOLDING STRUCTURE
As of 20-12-2023, SFPI issued a press release announcing plans to increase the family’s control and disappointment about a recent acquisition
FACT
By February 2024, ARC Management, Crédit Mutuel Equity and BNP Paribas Développement are preparing to acquire from Spring respectively 6.65%, 2.66% et 2.03% of SFPI. Arc Management which is controlled by Mr Morel, the founder, will end up with 57.52% of SFPI and 67% of the voting rights. Arc Management is raising debt to fund this purchase.
SFPI expects to write off in its 2023 reporting €19m of the goodwill on Wo&Wo, a recent Austrian acquisition with expertise in quality awnings.
ANALYSIS
The tighter control for Arc Management does not change the harsh reality of a tight float as the Spring stake, held by a long-lasting partner of the founder, was not floating anyway. Note that both CIC and BNP are seizing the opportunity to increase their holdings in SFPI at a time when minority shareholders have been walking away as has sadly happened with most small caps.
Obviously the increased family stake suggests continued confidence in the business. It may herald SFPI becoming private.
As the purchase price is set at €2.5, the shares duly adjusted by gaining a third on the news.
Pricey acquisition?
SFPI is biting the bullet on Wo&Wo, a €60m sales business purchased for €30m in mid 2022 on an EV basis, with a forte in DACH markets. With its prime markets down by 30%, SFPI rightly considers that the related goodwill is ripe for impairment. This means a one-off non-cash charge of €19m, wiping out the hitherto €17m expected result for 2023. SFPI is suggesting that the seller may not have been completely candid about its operations and hopes to recover some of the price.
IMPACT
While the reported earnings for 2023 are now likely to be close to zero, the adjusted earnings are not impacted as it is AlphaValue policy to exclude goodwill impairments from adjusted eps computations. However cutting Wo&Wo’s prospective turnover by about 15% does impact eps growth by -10% or so.
Separately AlphaValue will cease coverage SFPI from 15-01-2024.
Groupe SFPI SA. Groupe SFPI SA is a group of manufacturing companies based in France. Each company of the Group designs, produces and distributes equipment for the construction and manufacturing industries. The Group divides its business activities into two main segments: Construction and Manufacturing. The Construction segment focuses on the supply of equipment, convenience, security and energy efficiency to a number of access points, which includes joinery, shutters, industrial closures, locks, sophisticated access security systems, monitoring systems and alarms, among others. The Manufacturing segment focuses on heat exchanges, sterilizers, air conditioning units, pneumatic transport and dust extraction systems.
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