BHG Group - M&A pace back on track
Acquires HYMA Adds 9% to 2021e EBITA Valuation of 13. 8x EV/EBITA ‘21e (excl. earn-outs) Acquires HYMA On Wednesday after close, BHG Group announced the acquisition of 92. 2% of HYMA Skog & Trädgård (HYMA), which holds a leading market position within categories such as garden, tools and leisure with a broad portfolio of external and proprietary brands.
HYMA’s online share is said to be above 80%. The price tag of SEK 1bn will be paid through SEK 542 in cash and SEK 458 through issue in kind. Furthermore, there is an earn-out component of up to SEK 500bn, based on 2022e EBITA.
The acquisition is subject to approval from regulatory authorities and BHG expects approval in early Q3 2021. Strategic rationale HYMA strengthens BHG’s position as the largest online DIY player in the Nordics. The group has a large portfolio of external brands as well as proprietary brands (~20% of sales).
HYMA’s target customer group is overlapping BHG’s DIY customers. Financial rationale HYMA is said to have posted organic growth of around 30% in 2020 and 46% in January-April 2021 (no information on May performance was given), expected to reach SEK 1. 1bn in sales in 2021e.
Furthermore, with a solid EBITA margin of 7. 3%, the deal is said to be earnings accretive. HYMA adds 9% to EBITA.
However, with scale advantages, sourcing, cross-selling and implementation of best-practices, it seems fair to assume that there are significant synergies to be reaped. The implied multiple excluding earn-outs is slightly below 14x EV/EBITA (‘21e) but closer to 20x if we would add the full earn-out component of SEK 500m to the consideration. In contrast, the BHG shares trade at 21.
9x EV/EBITA ‘21e (ABGSC est. ).