AlphaValue Corporate Services Fundamental Analysis FR
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Chargeurs

CR
Bloomberg   CRI FP
Holding Companies  /  France  Web Site   |   Investors Relation
Carrying on with strategic acquisitions
M&A /Corp. Action28/01/2020

Strategic move towards museum servicing fully established

Chargeurs has taken a major step towards its goal of establishing global businesses in niche markets through the acquisition of D&P Incorporated, the US market leader in museum services. The strategic addition will fall under the revamped Museum Solutions division (ex-Technical Substrates), which is set to reach its €100m sales target well ahead of schedule.


Fact

  • Chargeurs signed the agreement to fully acquire the American leader in the museum services sector, D&P Incorporated.
  • The company is expected to generate revenues of $45m in 2020, and counts with a signed order book of c.$50m.
  • The newly renamed Museum Solutions division is set to surpass the €100m revenue target following the addition of D&P.
  • The acquisition price was not disclosed by the group, and the net/EBITDA ratio will stand below 3x following the transaction.

Analysis

What was at the outset primarily an industrial affair, the production of technical substrates, has seen the unexpected transformation into a one-stop shop solution for museum services and exhibitions. The incursion into the US market through the acquisition of D&P Incorporated marks a major step in Chargeurs’ quest for high-growth global businesses in niche markets. The strategic pivot was cemented by renaming the Technical Substrates division to reflect the management’s new ambitions.

As the US-market leader, D&P benefits from a sizeable footprint in the country with key customers, among which the Smithsonian Institution and a number of presidential and military museums. This has allowed the company to secure an order book of $50m and an unsigned ‘potential’ order list of closer to c.$100m. Regarding profitability, the group expects an operating margin above 10% and c.$5m in recurring cash flow per year.

With D&P being over twice the size of the second largest player, the growth potential may best come from the consolidation of this fragmented niche market. With this new addition, the newly created Chargeurs Museum Solutions is set to surpass €100m in full-year revenues, a year ahead of schedule, and attain 20% market share according to the management.


Impact

We will include the acquisition of D&P into our NAV estimates. As our DCF assumptions have already factored in a c.€100m increase in revenue from acquired growth, the impact on our valuation will stem from the expected profitability, an operating margin of 10%, compared to our base assumptions.


Target
Upside 89.0%
Price (€) 14.24
Market Cap (€M) 406
Perf. 1W: 1.57%
Perf. 1M: 3.64%
Perf. 3M: -18.2%
Perf Ytd: -16.6%
10 day relative perf. to stoxx600: -1.45%
20 day relative perf. to stoxx600: 6.38%
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