Navigator Paper’s £127.5 million takeover of Accrol Group Holdings PLC (AIM:ACRL) “reflects a fair value” for the business, reckon Liberum analysts.
The acquisition values AIM-listed Accrol at eight times forward enterprise value to EBITDA (EV/EBITDA) and offers “better value than a stand-alone entity”.
Analyst Anubhav Malhotra said: “The outlook for Accrol as a stand-alone business is one of limited growth and while FCF (free cash flow) prospects are better from here, they require large-scale debt-funded investment to be delivered and even then, we think there is a disconnect between FCF and EBITDA.
“Dividends would be limited and the need to pay down debt would be hampered by the acquisition/building of a mill which would see debt rise materially.
“Moreover, the proposed vertical integration would instil risk into the model which currently does not exist.”
Though some shareholders will be inevitably disappointed with the low bid premium, Malhotra called the 38p per share offer “a very fair and full price”.