Post by
sculpin2 on Mar 01, 2018 9:41am
Value range $1.54 to $2.15 in other estimate
Altacorp's take on the Tervita/Newalta merger...
A big headline M&A transaction of note this morning in the combination of Newalta (NAL, $84 mln mkt cap, Not Rated ($429 mln EV); CDN oilfield waste disposal co.) and Tervita Energy Services (Private, not rated, large CDN Oilfield and Industrial waste and environmental company). Would take this as a positive for the sector in general -Secure Energy Services (SES, Not rated reports after market today. Conference Call @ 11AM ET: Dial-in Info: 647-427-7450 or 888-231-8191
· Highlights
o New Tervita will be a publicly traded entity.
o Pro forma 2017 revenue and EBITDA are expected to be $2.6 bln and $201 mln ($245 mln after giving effect to $40-$45 mln expected synergies).
o Pro forma total debt/EBITDA is expected to be roughly 3.6x; We calculate that total debt for the proforma entity will be roughly $725 mln.
o Current NAL shareholders are expected to own 11-13% of New Tervita, depending on the extent that warrants are exercised.
o Deal requires 66.67% approval from shareholders of both NAL and Tervita.
o New Tervita will retain Tervita’s current management team.
· Mechanics of the Deal
o NAL shareholders will be offered 0.1467 New Tervita shares plus 0.0307 warrants to purchase 1 New Tervita share at a NAL equivalent price of $2.75, NAL shares are currently trading at $0.95 (exercisable for 2 years).
o @ an assumed 10x EV/EBITDA multiple, 11% ownership in the combined entity, and full credit for synergies, implied value per NAL share is roughly $2.15/share (126% premium).
o @ an assumed 8x EV/EBITDA multiple, 11% ownership in the combined entity, and full credit for synergies, value per NAL share is roughly $1.54/share (62% premium).
o Secure (SES-TSX) is trading at roughly 10x 2017 consensus EV/EBITDA, and 8.6x 2018 consensus EV/EBITDA.