Recipharm (Buy, TP: SEK155.00) - Acquisition and share issue
Recipharm has announced a new carve-out transaction in its European operation. In our view, the transaction has an attractive price multiple of EV/EBITDA of c5.3x and should be accretive to sales and margins. At the same time, the company announced a directed share issue of cSEK500m to finance the transaction. Our back-of-the-envelope calculations suggest that the transaction and financing are accretive by c5% at the EPS level. We reiterate our BUY recommendation and have increased our target price to SEK155 (SEK140).Recipharm AB and its subsidiaries is engaged as a manufacture pharmaceuticals and perform contract development services for pharmaceutical companies. Co.'s segment are Manufacturing Solids & Others, Manufacturing Steriles, Development & Technology and Other. The manufacturing segments consist of contract manufacturing of pharmaceuticals. The Development & Technology segment provides services to pharmaceutical companies in the drug development phase for new pharmaceuticals.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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