Bekaert FIRST LOOK:Acquiring Bridgestone Chinese/Thai tire cord activity for €60m
Bekaert's € 60m acquisition of Bridgestone's captive tire cord business in Thailand and China fits within a long track record of similar acquisitions and further strengthens Bekaert's relationship with Bridgestone, one of the leading global tire makers. With a net debt/EBITDA of only 0.7x, Bekaert can easily fund this acquisition. In general, management has been looking at M&A to accelerate growth, although sizeable M&A is having a tough time to compete against share buybacks in terms of attractivity, in our opinion. The healthy free cash flow generation and solid balance sheet allow Bekaert to work on both tracks, and the current SBB pace (c. €100m/y) in combination with the dividend imply a yearly attractive return to shareholders of c. 10%. With valuation very compelling, we maintain our BUY rating and € 55 TP.Bekaert is a global technological and market company engaged in advanced solutions based in steel wire transformation and coatings as well as an independent manufacturer of drawn steel wire products. In addition, Co. teams up with customers and suppliers globally to develop, implement, upgrade, and protect both current and future technologies. Co.'s business activities are put in practice along two main axes: Product Innovation and Process Innovation. Product Innovation helps Co. better serve its customers, while Process innovation enables Co. to increase operational effectiveness, minimizing its impact on the environment.
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