Europastry will be released to the public on October 10 with a valuation which would be around 1,600 million euros in the best scenario. This would imply a discount even on the maximum price of the range managed by the company, at 18.75 euros. Although the minority investor cannot benefit from this discount from the first moment, Europastry presents to the market a growing expectations for business volumemore acquisitions to grow inorganically and the reduction of its debt ratio. It even leaves the door open to the distribution of dividends from 2025.
In the most optimistic scenario for Europastry, which would involve the realization of the over-allotment, the discount on the company’s IPO would reach 12% on the average valuation of the share. frozen bread and pastries sectorbased on enterprise value multipliers between gross operating profit compiled by FactSet. And although qualified investors will get the first opportunity, Europastry’s plans go beyond October 10. Thus, the current number of shares is around 69.4 million shares. At the end of the offer, the number of shares would amount to 81.5 million at an average price of 17.3 euros per share (with an average number of new shares halfway in the range proposed by the company). And if the over-allotment was applied, the total number of shares would reach 83.74 million shares which would imply a floating capital of 31.7%.
If everything goes as planned, Europastry hopes to obtain 210 million euros through the subscription of new shares at an average price within its range. The company of frozen dough will use 109.1 million of these funds to reduce their debt and achieve a leverage ratio of less than 2.5 times (net financial debt divided by gross operating income). And at the same time as it reduces debt, the company expects profits to rise in a market that will increasingly demand frozen baked goods. If an annual increase of 0.9% in frozen bakery products was expected in Europe until 2026, it would reach 2.3% (2.9% in pastries). And in the United States, growth in frozen bakery would reach 5.9% compared to 1.9% for bakery in general.
The rest of the money obtained after the offer, once the costs and expenses linked to the IPO operation have been deducted (which would reach 22.6 million euros, according to the Europastry brochure) would be allocated to the business business growth through mergers or acquisitions other businesses in the short or medium term. An inorganic growth that the company has already demonstrated in 2024 with cases like that of August with the acquisition of the Dutch company De Groot Edelgebak which will add 16.5 million euros in turnover.
The company does not present any dividend distribution policy in its brochure, although it does not exclude that this could change in the future. If the the offer is taking place as planned by Europastry and if the legal minimum reserve requirements are met, the distribution of a dividend is envisaged in 2025, in which up to 30% of the current year’s results would be distributed among its investors. Based on 2023 net profit and the number of shares outstanding in the best-case scenario after his departure, profitability per the dividend would be 1.27%. And it would be about the same percentage if we apply the net profit of the first half of 2024 and the increase in profit of the second half of last year compared to fiscal 2022.
On the other hand, the company indicates in its brochure which risks are most relevant to the company. Interruptions in the supply chain such as that of cereals, which has already affected its listed comparables with the outbreak of the war in Ukraine which caused a shortage of cereals and volatility in the prices of this raw material.
End of “radio silence”
With the move to the forefront of Europastry, the radio silence regarding IPOs imposed during the summer. Unfavorable market conditions have led many companies to delay your jump to the ground until this second window of opportunity which opens in the fall. In this way, it is not yet ruled out that Cirsa, a gaming company, will resume its aspirations for an IPO in October.
The airline Volotea is not giving up its efforts to take the company public, even if its CEO postponed to the first quarter of 2025subject to the evolution of the elections in the United States, the evolution of consumption and the evolution of interest rates. Tendam, owner of Cortefiel, is another of the companies that would drop the fall. Even if company sources do not speak of a postponement, since they have never set a timetable for its IPO, sources close to the operation consider its immediate jump on the stock market to be complicated.
Ebro still has the opportunity in the fall to join BME Growth. The Spanish car manufacturer allied with the Chinese Chery recently carried out a capital increase with which it raised 40 million euros. Money that will help the company start vehicle production in the third quarter of this year. With the accounts that Ebro presented to its potential institutional investors, the company plans to increase its gross operating profit from 22 million euros to 250 million by 2029. And the same projections would bring the automotive company BME Continued market growth.
