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Love affair between Applus and big investment funds: more than 15 years for the Spanish ITV giant

The love affair between the big investment funds and the Spanish company Applus grows and continues. The multinational industrial certification and vehicle inspection company already has two takeover bids on the table, represented by two funds, which the market hopes will improve.

It’s the latest chapter in these investors’ interest in one of Spain’s ITV giants, where it has grown through acquisitions in recent years. Last, a company run by a night businessman who was a PP advisor years ago.

Last Thursday, the pending takeover of Applus by Amber Fund through its ISQ and TDR funds was confirmed. The firm of French-Armenian investor Joseph Oughurlian, president of Prisa Group, of which he is the largest shareholder and which also owns nearly 10% of Indra, has bettered the offer submitted by Applus in June for another fund. American Apollo.

Amber’s offer amounts to 9.75 euros per share of the certification group. This values ​​100% of the company at 1.258 million, a slight improvement from Wednesday’s closing price.

This improvement, in the eyes of the market, is insufficient and it is possible that a third fund, Apax Partners, will also be launched by Applus, whose shares have moved in recent days close to 10 euros per title, the level they lost after the large-scale stock market crash at the beginning of the coronavirus crisis And he still hasn’t recovered.

In advance, Applus’ board of directors last Friday issued a “positive opinion” on Amber’s “unsolicited” takeover proposal, as it offers shareholders the opportunity to monetize their investment at a premium to the stock’s book price. shares and higher. price than the initial bid.

Amber is competing with a takeover bid for 100% of Applus that Apollo launched late last June. In this case, it is offering 9.5 euros per share in cash, valuing the company at 1,226.2 million, a premium of 36.8% to the company’s price compared to the year before the offer was made.

This first takeover bid was presented in June following speculation with another bid from another fund, I Squared, also valued at around €9.50. Earlier, an expression of interest came from another fund, Brookfield, whose offer was then valued at around €10 per share, more than what Apollo and Amber are now offering.

In any case, these prices are still a long way from the more than 17 euros at which Applus shares were quoted in 2014, when the first fund to invest in its equity, the American Carlyle, went public. Almost a decade of stock market history that the takeover process will probably end. The two bidders imposed a requirement that their bids reach at least 75% of the capital. This will make it easier to sell the company from the stock market later.

Applus was founded in 1996 by the Aguas de Barcelona group, which today belongs to the French company Veolia. In 2004, it merged with the quality and environmental division of Soluziona, the former consulting subsidiary of what was then Unión Fenosa (today integrated into Naturgy), which in this transaction became a shareholder of Applus.

In 2006, the company was bought by another British fund, Candover, for about 1 billion, but the deal fell through. The sale was negotiated by Applus’ first CEO from 1996 to 2006, Sergio Pastore, who was eventually convicted in 2018 in the ITV case along with Oleger Pujol, Jordi Pujol’s son.

A year after the failed Candover acquisition, Applus was acquired by Carlyle in 2007 for 1,480 million, far more than Amber or Apollo are now offering to their then owners, Agbar (53.1%), Unión Fenosa (25%) and. What was Kakha Madrid then (21.9%).

This American venture capital firm resorted to one of the largest leveraged buyout (LBO) operations of the time: financing part of the purchase price with the company’s debt. Carlyle defeated another fund, the French Eurazeo, which joined forces with local businessmen such as the Miarnau family (Comsa), Sol Daurella (today’s European Coca-Cola bottler president) or José Antonio Castro (Hesperia Hotels) and tried to take over. company.

Seven years later, it was time for Carlyle to cash in, with Applus’ IPO in May 2014 through an offer aimed only at institutional investors to place 58.3% of the company’s equity at a price of 14.5 shares, valued at 100. % about 2000 mln.

Carlyle left Applus for good two years later and sold its remaining 14%. Since then, various funds and managers have passed through its capital, always very fragmented and without a suitable industrial partner. Since 2016, its largest shareholder has almost always been the Southeast Fund, which controlled more than 15% at the end of that year. He later reduced this package to about 5%.

Today, Applus is one of the world leaders in the inspection, testing and certification sector. With more than 25,000 employees and a presence in more than 65 countries on all continents, from January to June this year alone, the company had a turnover of around 1000 million and recorded a profit of 53.3 million.

With net financial debt of 730 million as of June (9% more than in December), approximately 52% of Applus’ turnover comes from the energy and industry segment, which employs approximately 16,000 employees; 20% of the revenue comes from the automotive division; and 16% of the Idiada automotive testing facility, whose concession is set to expire, prompting the Catalan Generalitat to launch a new tender. The rest of the billing comes from other types of labs.

Traditionally closely associated with Catalonia, Applus was one of the companies that moved its headquarters from Barcelona to Madrid in 2017, at the height of the independence boom. Perhaps the most famous move of his business is the ITVs. These vehicle inspection offices provide it with an annual revenue of approximately 460 million worldwide. About 5,000 employees depend on it.

This business unit has subsidiaries in 11 countries, USA and Finland after the recent sale. In 2022, it conducted more than 15 million vehicle inspections in Spain, Ireland, Denmark, Sweden, Andorra, Mexico, Argentina, Georgia, Chile, Ecuador and Uruguay, the company explains on its website.

In Spain, this activity depends on the autonomous communities that decide the governance model. They can directly deliver it to places like Andalusia (via the autonomous community Veiasa) or Valencia, where it went into public hands in the previous legislature, but now the PP and Vox government are considering privatizing it again or entrusting it to private companies.

And here Applus has a very appropriate weight. A study by the National Markets and Competition Commission (CNMC) published almost ten years ago placed it among the first operators in Spain, along with other operators such as Itevelesa or TÜV Rheinland.

At that time (data from 2013), Applus had fifty stations in seven Spanish autonomous communities, half of them in Catalonia, according to the CNMC, which pointed to Madrid as the region with the most freedom for this activity (rates are not fixed. and ITV placement requires only administrative authorization).

Applus further expanded this presence in Spain in 2017 by acquiring the Galician ITV concessionaire (whose license was extended from 2022 to 2027) for 89 million, or ITV Canarias in 2020.

The last acquisition in this branch of activity was in 2022, for 14.2 million, the purchase of Entidad IDV Madrid, a company that has three ITV stations located in Majadahonda and the Madrid districts of Vicalvaro and Fuencaral.

Created in 2010 in Tomelloso (Ciudad Real), the IDV Madrid Entity, which before its acquisition by Applus had an annual turnover of around 5 million, had Dionisio Lara as administrator and shareholder, a hotelier who was an economic promotion advisor in the 90s. PP. in that city and who heads the Noche Madrid Night Business Association. “No politician would risk his prestige for the hospitality industry as you have,” he told Isabel Dias Ayuso when he presented her with an award in January 2022 for managing the pandemic.

The transaction gave Applus access to “nine ITV stations in Madrid, strengthening its position as the company with the most inspections in Spain and the region,” according to the company when it announced it in April 2022. The operation, which has not been made public, was recorded in the latest accounts of the subsidiary that channels Applus’ ITV business in Spain, Applus Iteuve Technology.

According to these reports, available through Insight View, this subsidiary closed 2022 with more than 1,000 employees and a profit of 29 million, after accounting for about 105 million, more than half, in Catalonia.

Source: El Diario





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