A bit more than a year ago Akzo Nobel declined to be taken over by PPG for EUR 96,75 per share. Currently the shares are trading for EUR 74,50.
Based on 2017 book value per share EUR 23 and Earnings per Share EUR 3,3 the company has a Graham Value of EUR 41,- (15 x EPS = EUR 50. what first glance the stock doesn't seem cheap.
The company is now being split up in 2 parts: Specialty Chemicals which is being sold to private equity investors for EUR 10,1 billion and Paintings & Coatings which should keep making money for shareholders. Workers are currently threatening to go on strike and ex-CEOs say more of the cash from the sale of part of the company should go to the retirement fund.
Ignoring that, the earnings of Paintings & Coatings have fallen. Q1 2018 EUR 0,4 per share x 4 = EUR 1,6 per year x multiple of 15 = EUR 24 per share going concern.
Cash from sale per share = EUR 10,1 billion / 0,253 billion shares = EUR 40 / share Specialty Chemicals sale proceeds.
EUR 24 + EUR 40 = 64 EURO guesstimate of value per share. Compared to a price of EUR 74, Akzo Nobel still seems expensive. There is no "Margin of Safety" for the Graham Defensive Investor.
What strikes me is that in Q1 2018 the company raised the prices off paints and said to shareholders: Look at how we have increased margins by 3%! whilst at the same time saying: Volume has decreased 8% due to external circumstances. .... Personally, I like companies with more customer focus and/or pricing power than companies that seem to be run by the financial department, consultants and/or investment bankers.
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