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OHL: GRUPO VILLAR MIR SELLS 16% TO THE AMODIO FAMILY (ANÁLISIS BANCO SABADELL)

The company has just announced that Grupo Villar Mir (30.6% OHL) has subscribed an agreement with Amodio family (100% Caabsa) to sell the latter 16% of its capital at € 1.10/sh. (~2x yesterday’s close; € 50.4 M). On another note, Grupo Villar Mir has offered a call option of up to additional 9% at € 1.20/sh. (~2.2 x yesterday’s close) until the 22nd of November, 2020.
Although we welcome the willinginess of the Amodio family to pay a price that doubles the latest share price, this deal would have no impact on our fundamental valuation post Covid-19 that will be ~ € 0.60/sh. Furthermore, this would mean the sale of a stake lower than 30% (the Amodio family would reach 25% maximum), and thus, it would not benefit the rest of minority sharheolders with a takeover bid (given the change of control, the CNMV could force it to launch the bid and even though this is not our central-case scenario, if materialized, this could undermine the deal, as the condition imposed by the Amodio family was not launching a takeover bid). Separately, the reduction to the stake in GVM (to between 14.6% and 5.6% depending on whether the Amodios exercise their option on the additional 9%) could increase and improve the company’s bank financing, as for some time the banks have been requesting the stake in GVM be lowered. Lastly, we welcome the cash inflow towards Grupo Villar Mir (€~50 M for the 16% and € 81 M if it is 25% in the end), which could be used to face debt repayments, of which €~120 M would be in OHL’s favour (Pacadar debt). Currently the stock is rising +48% (+49% vs. IBEX), which is logical due to the acquisition price being much higher than the market price, but as we have stated, this does not change our opinion on the stock.