CEDC Mulls Acquisition of Stake in Nemiroff
OREANDA-NEWS. February 05, 2010. Owners of the Ukrainian spirits producer Nemiroff are considering the sale of a stake in their business, according to a Kommersant report. Nemiroff is the largest Ukrainian spirits company, with a 2009 sales volume of 80m liters. In 2008, Nemiroff vodka had a 3.7% share of vodka sales in Russia (in ruble terms). Speculation places CEDC among the companies most interested in acquiring part of Nemiroff, reported the press-centre of OTKRITIE Financial Corporation.
View: Such an acquisition would be solid strategic fit for CEDC, though the threat of cannibalizing sales of CEDC brands such as Parlament and Marusya would remain. We estimate the value of Nemiroff’s business at US350m, on a EV/EBITDA multiple of 8.5x (which is a premium to SYNG). The company reported 2009 EBITDA of \\$41.2m. The acquisition would add US 218m (14%) to CEDC’s 2009 revenue and US 38.3m (12%) to its 2009 net income, on our estimates.
Valuation: CEDC stock is currently trading on a 2010 EV/EBITDA of 9.6x, which is a 35% discount to EM peers.
Action: We reiterate our BUY rating for the stock. We think that the news will be taken positively by the market.
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