Siemens: deal with Alstom value accretive, UBS says.
(CercleFinance.com) - UBS this morning confirms its "outperform" rating on the share of the German conglomerate Siemens, which has just announced a memorandum of understanding that will lead to the merger of its railway division with the French group Alstom.
UBS maintains its 12-month target price for the stock at 131 euros.
According to the broker's analysts, the creation of a sort of Airbus in railway equipment "will be accretive for both parties" and at Siemens could unlock an additional value of 2.1 euros per share. From this total, 1.1 euro would result from synergies, which UBS conservatively estimates at just 1% of combined sales, while Alstom and Siemens target 2.5% (470 million euros). There will be another 2.1 euros per share due to the increase in SiemensAlstom's capitalisation multiples, which will move towards critical mass and which will become more stable. However, 1.1 euro will be subtracted due to extraordinary dividends.
Siemens would hold a 50% stake in SiemensAlstom. It will not be able to exceed 50.5% over the first four years after the deal's completion. "Siemens will hold 50% and receive warrants to acquire 2% of Alstom capital,” which could be exercised at least 4 years after closing, the report says. As such, the German group could therefore increase its stake in the medium term.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
UBS maintains its 12-month target price for the stock at 131 euros.
According to the broker's analysts, the creation of a sort of Airbus in railway equipment "will be accretive for both parties" and at Siemens could unlock an additional value of 2.1 euros per share. From this total, 1.1 euro would result from synergies, which UBS conservatively estimates at just 1% of combined sales, while Alstom and Siemens target 2.5% (470 million euros). There will be another 2.1 euros per share due to the increase in SiemensAlstom's capitalisation multiples, which will move towards critical mass and which will become more stable. However, 1.1 euro will be subtracted due to extraordinary dividends.
Siemens would hold a 50% stake in SiemensAlstom. It will not be able to exceed 50.5% over the first four years after the deal's completion. "Siemens will hold 50% and receive warrants to acquire 2% of Alstom capital,” which could be exercised at least 4 years after closing, the report says. As such, the German group could therefore increase its stake in the medium term.
Copyright (c) 2017 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.