Vestjysk Bank - AL bid: Offer document out
Offer ends July 6, VB board position June 21 at the latest DKK 3. 45 bid is in the low end of our fair value range Bid PE of 8x 2022e looks low vs. recent transactions VB board recommends shareholders to await its position This morning, Arbejdernes Landsbank (AL) published the offer document for the DKK 3. 45 per share bid for all shares in Vestjysk Bank (VB).
The offer begins today, June 7, and ends on July 6. The board of Vestjysk Bank will distribute a statement on AL’s offer at June 21 at the latest while it recommends, that the shareholders of VB await the position of the board before deciding whether to accept the offer. The mandatory bid follows AL increasing its stake in Vestjysk Bank to 61% on May 31 by acquiring 28% of the shares from Nykredit and AP Pension paying DKK 3.
45 per share. AL bid in the low end of our fair value range of DKK 2. 7-5.
5 AL’s bid is as pre-announced with the DKK 3. 45 per share being in the low end of our fair value range for Vestjysk Bank of DKK 2. 7-5.
5 with the high end including 50% of the annual synergies of DKK 200m we believe that AL could harvest in a merger with Vestjysk Bank in the long run. We do not believe running to separate banks in the long run makes sense. At the same time, we note output prices for milk (global prices) and pork meat in a significant rebound potentially indicating upside in the DKK 3.
1bn writedown account of Vestjysk Bank, of which a significant part is reserved for pork and dairy farmers. A potential upside from the agricultural writedown account comes on top of our fair value range. Sensitivity: Assuming DKK 1bn being excess writedowns would lead to an add-on of DKK 0.
7 per share to our fair value range. Bid does not seem to reflect synergies With a bid PE for 2022e of 8x we believe AL is bidding a price below the level of recent Danish banking transaction of 12-13x next year’s PE and we do not believe the AL bid contains payment for potential synergies ahead. Thus, we struggle to see.