Besides the stand-alone value, the supervisory board is interested in the value in a transactional setting. This value is calculated by applying the DCF-approach on the same management case and base case, with the same sensitivity in the WACC the long-term growth rate.
But in the transactional context synergies have been plotted in, based on their estimated EBITDA effect. The same probability (8.1.6) has been applied to the valuation of the management case and the base case including synergies, leading to the probability weighted valuation of Ordina in a transactional context in the range of €217 - €247m.
To calculate company value in a transactional context
based on market prices for similar assets, a comparable transaction analysis (CTA) has been performed. This market approach estimates the value of a company based on recent transactions of similar firms. It is important to realize that transaction multiples are usually distorted by synergies, timing issues, irrational pricing and deal specific issues. On the other hand, it is the most fact-based information available on current pricing of transactions in the market that comprise the control perspective.
The transactions have been selected in a similar way as the peer group for the CCA: based on industry, geography, size and life cycle phase. In addition, the date of the transaction has been a criterium, as deal values are also a reflection of the current market of demand and supply. By using deal data from the last 12 months this impact has been limited, keeping the focus on fundamentals.
The medians of EV / Sales, EV / EBITDA and EV / EBIT are taken and applied to the financials of Ordina. Including the mentioned sensitivity weighing, the CTA values Ordina based on its normalized 2018 performance as following:
The CTA indicates that the price paid in the market would not fully reflect the synergy potential as calculated with the income approach. Probably the potential is discounted on likelihood or because strategic buyers don’t recognize the (full amount of) synergies used in the DCF-valuation. Either way, an important finding that should influence the perspective on a potential sale which Ordina would present to its shareholders.