Boparan - comment
Disposing of the European business will reduce leverage at Boparan. The Boparan family office is paying €200m, and we estimate the disposal will reduce headline leverage PF the disposal to c4.0x. The Polish competition authorities must approve the sale, expected by the end of September. We still expect a refinancing transaction from Boparan in November. We anticipated that Boparan would be able to issue a new SSN, but this deleveraging transaction is the proverbial rabbit out of a hat. The trade is contingent on approval from the Polish competition authorities. Up to 30% of the cash may be used to reduce the pension deficit.
The Boparan family has never provided much detail about the European business, but we have assumed it is around 1/3rd of turnover. We use an EBITDA margin of 5% and a price of €200m = a multiple of a little over 4.25x, which is about right for a low-margin business. The multiple paid on current trading may be higher as EBITDA in Europe has been hurt since COVID by the loss of export markets in China and chicken imported from Ukraine since the war.