Etteplan is buying Semcon for EUR 258m - Nordea

Etteplan offers SEK 149 per Semcon’s share, which is 32% over yesterdays’ close price. The board of directors of Semcon has recommended to accept the offer. A competitive offer is possible but not likely we believe. The proposed deal indicates EV/S valuation of 1.3x compared to Etteplan’s own EV/S of 1.2x (peer group median 1.3x). The transaction is not very expensive but timing is interesting. Etteplan is late-cyclical company and economic indicators forecasts weak years for engineering consults. However, Etteplan has a very successful M&A track record which gives confidence for today’s announcement. Semcon has 2,000 employees in seven countries compared to Etteplan with 4,000 workers in 8 countries. The combined company would become a Nordic market leader in technology services for industries. The also deal offers new customers, like Volvo Cars and to AstraZeneca, for Etteplan. Annual synergies are estimated to be over EUR 5m. Market consensus (Refinitiv) for Semcon’s EBIT 2022E has been SEK 184m. Added with full synergies, the deal would be under Etteplan’s own EV/EBIT valuation (peer group EV/EBIT median 13x).