Testing and laboratory services company ALS could reap $180 million from the sale of its asset care field services business.
That's the view of Macquarie analysts who said ALS paid 10-times earnings for the unit in the 2009 financial year. If it gets 10-times on the way out, Macquarie says that could be a $180 million payday, in terms of sale proceeds.
"We expect interest from global asset care players (Mistras, Acuren, Applus, and BV)," the analysts told clients.
Deutsche Bank analysts reckon the business is worth seven to nine-times EBITDA, which would put a $132 million to $170 million enterprise value on the business.
"In our view, the closest comparable listed company is Mistras (not rated, US21.74) which based on Bloomberg consensus estimates has revenues of ~US$700m, EBITDA of ~US$80-90m, an EBITDA margin of 10-11% and is trading on a FY17 EV/EBITDA of 9.9x and on an FY18 EV/EBITDA of 8.8x," Deutsche Bank told clients.
"We believe ALQ's Asset Care business deserves a valuation EV/EBITDA multiple of between 7.0x to 9.0x, after taking into consideration its higher margins but smaller scale and lower geographic diversification."
ALS said on Thursday it was evaluating strategic options for the asset care business following recent inbound interest, and had hired Merrill Lynch to test the market.
Macquarie analysts said the question for shareholders was whether ALS's balance sheet would be undergeared following slated divestments.
"The prospect of US$70m for Oil & Gas and c$180m for Asset Care would effectively halve net debt from last reported $492m (ND/EBITDA 2.1x) and leave ALQ under-geared," Macquarie said.
"We think ALQ's preference is for acquisitions, but in the absence of suitably priced deals, this raises the prospect of some form of special dividend or buyback."
