Michelin: UBS still a buyer after Camso acquisition

(CercleFinance.com) - This morning UBS confirms its buy rating on the share of the tyre maker Michelin, which yesterday announced the acquisition of the Canadian group Camso.


The broker maintains its 12-month target price of 117 euros.
By taking over the Quebec based company Camso, for an enterprise value of 1.7 billion dollars, the group headquartered in Clermont-Ferrand becomes the world leader in the "off the road" tyre (and tracks) market, by doubling the size of its revenues in this segment. The price paid represents 11.3x of the target's EBITDA before synergies, which are estimated at 55 million dollars, and 8.3x thereafter, in line with multiples seen in similar transactions that have occurred recently.

Financially, UBS calculates that Michelin will spend approximately one year of free cash flow that it generates on this deal. Indeed, the latter will dilute the group's EBITDA margin by 20 basis points, although the net debt/EBITDA ratio, which is expected to be 0.85x, should remain manageable, even though this acquisition is occurring just two months after that of Fenner.



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