(BFM Bourse) – Co-author of Vernimmen, a “bible” for financial practitioners, and professor at HEC, Pascal Quiry is also an investor in a small number of listed companies, including SMTPC, of which he holds 1.95% of the capital. Despite an increase from 21.10 to 27 euros, the price offered by Eiffage and Vinci still appears to him to be well below the intrinsic value of the action. And according to him, this is not an isolated case.
BFM Bourse: The independent expert responsible for reviewing the buyout offer submitted by Eiffage and Vinci to the other shareholders of Société Marseillaise du Tunnel Prado Carénage has drawn up an addendum to its initial report, taking into account the latest results published by the company and “points raised by letters from minority shareholders”, of which you are a part with 2% of the capital. In view of these elements, the expert maintained his opinion, estimating that the offer at 27 euros (raised from 21.1 euros) was fair. Is it a detail in the procedure?
Pascal Quiry: This is indeed a matter of detail, and obscures the essential, which is that the SMTPC has never achieved such a high gross operating surplus (EBITDA) margin as in 2021. Although the activity has not yet returned over the whole financial year to its 2019 level and despite the non-recurring costs linked to the proposed offer (since the lawyers and the work of the independent expert must be well remunerated), this margin EBITDA amounted to 77.3% in 2021, compared to 76.2% before the pandemic. The main reason is the considerable effect of the increase in the amount of fines for toll violations, the unit amount of which increased on March 18, 2021 from 20 to 90 euros – according to a national provision and not specific to SMTPC. From 167,000 euros in the first half of 2020, the proceeds from fines rose to 475,000 euros in the first half of 2021 with only 3.5 months of application of the new amount, on an annual basis this is equivalent to 1.45 million euros collected compared to 0 .4 million previously.
SMTPC indicates that the fall in operating expenses “comes mainly from the fall in the allocation to amortization of lapses relating to the construction costs of the Schlœsing ramp”. What do you think?
Schematically, the suspension of these allocations – for which no explanation is given – could correspond to the prospect of an earlier than planned opening of this ramp, intended to improve service to the South and East districts of Marseille, and therefore traffic provider. Very interesting point because, the duration of the concession of the work being fixed, the earlier the ramp opens and the longer the company will benefit from its contribution, which must then be reflected in the valuation.
In concrete terms, do the company’s latest publications change anything about the consequences of the planned offer for minority shareholders?
Two certainties do not change. On the one hand there will be an offer since by creating a concert the two main shareholders Vinci and Eiffage are under the regulatory obligation to launch one. On the other hand, the expert having refused to certify the fairness of an expropriation at the price of 27 euros, this offer cannot be followed by a compulsory withdrawal even if they obtain 90% of the capital – which I doubt. As a result, it is an offer without the possibility of expropriation that is submitted.
It is therefore for you the assurance that you will be able to keep your 2% stake in the capital of SMTPC. Why then continue your approach?
It’s a matter of principle. With 26 years of experience in financial engineering and business valuation at BNP Paribas and benefiting from a certain audience in the stock market, I am scandalized that large groups, including members of the CAC 40, seek to manipulate their business plan to buy back shares at the lowest possible price from shareholders who do not necessarily have a high level of knowledge in finance and law. This is what I fight for. How not to be shocked that SMTPC produced in 2019 a business plan providing for 6.3 million euros of investments, an amount which rose without explanation to 23 million euros when establishing the price valuing the redemption of the shares minority? Furthermore, which is logical for a company that collects toll receipts in cash but pays its employees and suppliers at the end of the month, the SMTPC benefits from a negative working capital requirement (historically representing -14% business)… This does not prevent the company from producing a business plan providing for a positive WCR of approximately 7% of turnover. This is not fair! I am lucky to have time and skills but, if I had not intervened with other minorities, there would never have been articles on the SMTPC and the minorities, including thousands of small holders would have been expropriated at 21.10 euros, the price initially envisaged. Some issuers need to stop manipulating information and being disloyal.
Do you consider the SMTPC affair to be an isolated case?
This type of practice is likely to result in a higher second-round bid within 12-18 months. These cases are multiplying and it is very demeaning for the Paris market. See Groupe Open, which at the end of 2020 was the subject of an offer at 15 euros, the fairness of which was certified by an independent expert, but which undervalued the company to the point that half of the float was not contributed. .. so that only one year after an offer is relaunched at 33.50 euros, or 123% more! A new offer which we can already bet that a new independent expert will find it just as fair… We can also mention Devoteam with an offer raised by nearly 72%, IGE + Ixao or even Envea. Redeeming the actions of naive or simply mindless people is not fair. My fight is for shareholders to understand what is happening and to be able to make informed choices, whatever they may be. If people of my skill and experience won’t say there’s a problem, who will?
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