Elis share price continues to fall, as Vestis dilutes capital

(CercleFinance.com) - Elis shares continued to fall on the Paris Bourse on Monday, as the group confirmed on Friday that it was in talks to acquire the American company Vestis.


The industrial laundry group's share price continued to fall, after dropping more than 15% on Friday.

The group announced late Friday afternoon that it had made a preliminary approach to Vestis regarding a potential acquisition, while stressing that there was no guarantee that these discussions would be successful.

While Elis has assured that it intends to remain disciplined and maintain its investment grade credit rating, such an operation would result in dilution of existing shareholders, analysts warn.

In the event of a buyback, a share issue seems (...) unavoidable, and we estimate a dilution risk of around 24-34% for shareholders", observe the teams at TP ICAP Midcap.

Oddo BHF refers to this as a "major surprise", whereas the company's management had recently been talking more in terms of a strategy of deleveraging and targeted acquisitions.

The research firm nevertheless acknowledges that the US market remains strategic for management, as it represents the world's largest market.

"An acquisition in the United States would be a major operation that could create a natural wait-and-see attitude, but with significant long-term development potential", concludes Oddo.

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