03 January 2006 22:03 [Source: ICIS news]
NEW YORK (ICIS news)--BASF’s $38/share offer for Engelhard is fair, but leaves some room on the table based on Engelhard’s scarcity value, said Deutsche Bank Securities analyst David Begleiter on Tuesday.
At 19 times estimated 2006 earnings and 11 times estimated 2006 EV/earnings before interest, taxes, depreciation and amortisation (EBITDA) (12.7 trailing 12-month EBITDA), the analyst said he considers the $38 offer price to be fair relative to current specialty chemical group trading multiples of 16 times estimated 2006 earnings, 8 times estimated 2006 EBITDA and 2005 specialty chemical merger and acquisition (M&A) multiples of about 10 times trailing 12-month EBITDA.
“While we consider the $38 offer fair, we believe BASF or another bidder could ascribe additional value to Engelhard based on the scarcity value of Engelhard's automotive and diesel emission catalyst business - one of only three in the world along with Johnson Matthey and Umicore positioned to benefit from long-term secular trends of increasingly stringent emission control regulations, cleaner air and more environmentally friendly products,” Begleiter said.
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