The proposed disposal of Billi, conditional on shareholder approval, is transformational for the Group. Ahead of any movement in capital allocation, net cash would amount to c£37m on the repayment of all indebtedness. The net consideration of £107m equates to 45p/share, representing a premium to the current share price. Accordingly, we estimate the retained operating business is currently trading on EV/Sales and EV/EBITDA multiples of less than 0.7x and 3x-4x, respectively.
- Strix Group has received an unsolicited approach for Billi and the proposed deal values the business at a consideration of £110m, which represents a significant uplift (2.9x) on the cash-and-debt-free price paid by Strix in early 2023 (£38m).
- Should investors ratify the transaction the focus should return to the cash generative ability of Controls and the Group’s potential growth and yield attributes.
There is no change to current estimates and the outcome of the conditional proposal is uncertain. We retain our previous fair value / share at 89p. This represents a marked premium to the closing share price. With investor’s focus likely to be modified to favour growth and yield considerations, from debt-related risks, we anticipate a re-rating of the shares.
