EUR 465.57 For Business Accounts Only

Adevinta (Hold, TP: NOK115.00) - Strategy pays off

Adevinta’s Q3 results confirmed that it is on track to achieve on its 2023 guidance and long-term strategy. Although some investors question whether the NOK115/share bid price reflects the latter, we believe the bid has a high likelihood of being accepted. We have downgraded the stock to HOLD (BUY) and cut our target price to NOK115 (120), despite slight estimate increases.
Q3 EBITDA 4% above consensus with reiteration of the guidance. Adevinta reported revenues of EUR454m (we expected EUR454m, consensus EUR453m), and EBITDA of EUR171m (we expected EUR165m, consensus EUR164m). The beat in EBITDA was driven by Mobile.de (EUR65m, consensus EUR62m) and European Markets (EUR83m, consensus EUR79m), while France and International Markets were in line. Adevinta now expects 2023 EBITDA to be in the high end of its EUR620m–650m guidance. Our 2023e EBITDA is up 1%, slightly above the high end of the guidance.
Permira and Blackstone bid NOK115/share. Yesterday evening, Permira and Blackstone announced a voluntary tender offer of NOK115/share. Shareholders may choose to receive the offer price in cash, one depository receipt representing one share in an indirect parent company of the offeror, or a 50% combination of shares and cash. The offer has a minimum acceptance level of 90% (72.3% already accepted), but the offeror is free to waive this condition.
Downgraded to HOLD and target price lowered to NOK115. Although the bid premium (54% to the 3-month weighted average share price prior to the bid talks being announced) for Adevinta is in line with historical levels, one could argue that Adevinta’s share price was low due to the share overhang from Adevinta and Schibsted. Furthermore, the offer price is a 20–25% discount to our SOTP and fair value based on growth and margin-adjusted multiples. That said, it implies an EV/EBITDA for Adevinta of 19.4x for 2023e and of 16.8x for 2024e, which is broadly in line with peer group averages of 21.5x and 18x, respectively. Furthermore, we believe it is broadly in line with market expectations, and the already high acceptance level makes it likely to be accepted, in our view.