Analysts at Berenberg more than doubled their target price on Aggreko from 410.0p to 880.0p on Monday after a buy-out offer from a consortium made up of TDR Capital and I Squared was recommended by the group’s board.
Berenberg said the 880.0p per share offer represented a 39% premium to Aggreko’s closing price on 4 February and believes the valuation to be more “easily justified” by private markets and sees the upside risk from a viable higher counter-offer as being low.
“The offer is a significant premium to the pre-offer period share price,” said Berenberg.
Given the risk and significant investment involved in Aggreko’s strategy, the German bank thinks shares will likely revert back to between 600.0p and 650.0p in event of the bid not being accepted by shareholders or the offer being taken off the table.
“Unlocking the value of private equity would take longer as a public company given the constraints on leverage,” said the analysts, who highlighted that this limits the company’s flexibility to pivot towards attractive end-markets and deserves a discount.
