Looks like the Belgian shares ($PAY.BR) are those of a subsidiary of an Israeli HoldCo ($PAYT.TA), rather than a dual listing, so not a straight arbitrage. Nevertheless, an intriguing situation - perhaps they could collapse the HoldCo structure.
Yes, it’s not a straight arb. The Belgian listing holds the shares of the underlying operating company. Same voting rights on the business as the one listed in Israel. This could be collapsed by FIMI if they wanted. It would simplify the cap structure
Yeah, the results could’ve been better, but it’s really not a big deal. This is a business with cyclical drivers, and a bit of quarterly earnings variation doesn’t worry me.
The acquisitions look very strong, and they’ve still got $60m in net cash; that’s a solid position.
Valuation remains cheap, and with FIMI involved, you can see the strategic push in how they’re handling M&A. I really like the recent acquisitions. They’ve got real skin in the game and will be motivated to make this work.
I still really like the setup here. Will keep monitoring, of course
I should have put calculations as it’s quite confusing. The Belgian listing has just under 6m shares free float the rest of the op business is owned by Paton Indistries listed in Israel.
So the market cap of the Belgian listing is 5.9m x current share price 6.6EUR, which comes to c. 39m EUR. This 1/3 of the operating company
The market cap of the Israeli hold co is valued at 545m ILS which at current exchange rates 4.2 per EUR, gives a market cap of c.130m EUR. This is 2/3 of the underlying op company.
If the whole company is valued on the Israeli basis (130m /2) x 3, then you get 195m EUR for the whole business. I made a typo and put 300m EUR, but should have been 200m EUR at time of writing.
So the upside on conversion of Belgian shares to current price of Israeli shares is 66.6% (65/39 -1)*100.
I misquoted the upside purely for the arb closing. I said quote 120% upside, but that was including some of my personal growth estimates. I should have said 60% upside on closing the arb. It is now 66.6% upside on arb alone.
The Israeli listing should always carry a premium because it has the controlling stake which is clearly more valuable than the minority listed in Belgium.
Looks like the Belgian shares ($PAY.BR) are those of a subsidiary of an Israeli HoldCo ($PAYT.TA), rather than a dual listing, so not a straight arbitrage. Nevertheless, an intriguing situation - perhaps they could collapse the HoldCo structure.
Yes, it’s not a straight arb. The Belgian listing holds the shares of the underlying operating company. Same voting rights on the business as the one listed in Israel. This could be collapsed by FIMI if they wanted. It would simplify the cap structure
Q1 seems not great, revenue and profit were all down..
Yeah, the results could’ve been better, but it’s really not a big deal. This is a business with cyclical drivers, and a bit of quarterly earnings variation doesn’t worry me.
The acquisitions look very strong, and they’ve still got $60m in net cash; that’s a solid position.
Valuation remains cheap, and with FIMI involved, you can see the strategic push in how they’re handling M&A. I really like the recent acquisitions. They’ve got real skin in the game and will be motivated to make this work.
I still really like the setup here. Will keep monitoring, of course
Hello,
I couldn't make your figures work. The market cap on Euronext is 116.3m euros (not 300m dollars).
The market cap in Israel is 537.4m shekels. A euro is worth 4.18 shekels. This gives a market cap of 128m euros.
So there is an arbitrage situation, but it's much less dramatic than your article is saying.
Hi Chris, thanks for reading and the feedback.
I should have put calculations as it’s quite confusing. The Belgian listing has just under 6m shares free float the rest of the op business is owned by Paton Indistries listed in Israel.
So the market cap of the Belgian listing is 5.9m x current share price 6.6EUR, which comes to c. 39m EUR. This 1/3 of the operating company
The market cap of the Israeli hold co is valued at 545m ILS which at current exchange rates 4.2 per EUR, gives a market cap of c.130m EUR. This is 2/3 of the underlying op company.
If the whole company is valued on the Israeli basis (130m /2) x 3, then you get 195m EUR for the whole business. I made a typo and put 300m EUR, but should have been 200m EUR at time of writing.
So the upside on conversion of Belgian shares to current price of Israeli shares is 66.6% (65/39 -1)*100.
I misquoted the upside purely for the arb closing. I said quote 120% upside, but that was including some of my personal growth estimates. I should have said 60% upside on closing the arb. It is now 66.6% upside on arb alone.
The Israeli listing should always carry a premium because it has the controlling stake which is clearly more valuable than the minority listed in Belgium.
Hope than answers your questions!
Thanks,
Joe