Relais: Expanding to workshop equipment business through acquisition in Norway

Relais: Expanding to workshop equipment business through acquisition in Norway - Nordea

Relais announced expansion to workshop equipment business in Norway. The company acquires workshop equipment business of NDS Group, consisting of AutoMateriell business and the shares in Nordic Lift. In 2022, acquired business unit had NOK 198m sales (~6% of Relais 2023E sales) with NOK 13m EBIT (based on Norwegian GAAP and roughly ~4% of Relais 2023E EBITA), corresponding to a 6.6% margin (we have modelled 12.6% EBITA margin for Relais in 2023E). Acquisition price of NOK 70m, corresponding to 5.4x 2022 EV/EBIT excluding any earn-outs and 7.6x with full NOK 29m earn-outs. Based on our estimates, Relais is trading with 2023E EV/EBITA of ~11.5x. Closing of the deal is today and the acquisition will be financed with existing cash reserves which, based on our calculations takes 2023E net debt/EBITDA to above 3x (including IFRS-16 leases).

New workshop equipment business creates a new growth leg for the company and we would not be surprised to see further add-ons in 2024. In addition, we believe the company is seeking for more exposure towards electric vehicles where Norway has a clear head start compared to other Nordic countries. As an example, Nordic Lift and AutoMateriell have worked in Norway with the country’s biggest EV supplier and other authorized EV workshops. To our understanding, there is only small seasonality in acquired businesses, although part of the sales are project type. The acquisition is slightly dilutive for margins in the beginning while we do not expect any material synergies from the acquisition as there is no meaningful overlap with existing offering. However, we note that Relais has a good track record on improving margins of acquired businesses. In addition, the business model of acquired businesses appears to be well suited with Relais current operations and should allow efficient capital allocation in the future. We note that the acquisition price is well in line with previous acquisitions and enables future organic and M&A driven growth. We have a fair value range of EUR 16.2-19.8 per Relais share.

Relais: Expanding to workshop equipment business through acquisition in Norway - Nordea

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