Alcadon - Welcome addition of 6X International
Acquires established fiber & network company Adds attractive exposure and c. 40% to ‘21e EBIT New fair value range of SEK 25–60 Alcadon acquires 6X International On 7 January, Alcadon completed the acquisition of 6X International. It is a top three player in the Danish market that, similarly to Alcadon, is active in the market for fiber and network components. In its last FY, 6X had sales of SEK 178m with an EBITDA margin of 11%.
We expect 6X to add c. SEK 238m (45%) and SEK 21m (40%) to group sales and EBIT in ‘21e, respectively. The high growth compared to 6X’s FY 19/20 is driven by its recently launched German branch (with an annual run rate of c.
SEK 50m in H1‘20e) and strong underlying markets. We primarily see potential for revenue synergies through a broadened supplier base and cross selling of own products, which both companies offer. The purchase price of SEK 75m implies a valuation of 4.1x EBITDA, significantly below Alcadon’s valuation of 8.4x at the time, and value accretive for shareholders, as the incremental ROCE for ‘21e should reach 30%.
Increased exposure to growing markets While the Swedish market is patiently waiting for the next wave of fiber investments, 6X is offering exposure to the already growing Danish and German markets. We estimate that 6X could have annual organic growth of c. 15% (10% in Denmark, 30% in Germany), lifting group growth to 10% in ‘22e, from 7% previously.
Germany is particularly exciting given the long-term growth trajectory and market fragmentation. Currently, German fiber penetration is only at c. 4%, but is expected to increase to c.
34% in ‘26e, offering a 42% CAGR opportunity (see page 4-5). 10x EV/EBIT in ‘21e, on a 39% EBIT CAGR in ’19-‘22e Post-acquisition, Alcadon will go from a ND/EBITDA of 1.5x to 1.8x for ‘21e, leaving room for more M&A (able to increase EBIT by 50% assuming 3.5x ND/EBITDA in ‘21e). On improved prospects, Alcadon is trading at 10x ‘21e EV/EBIT, a 12% premium to its 2y average +1 FY....