On Tuesday, ABC Technologies filed its preliminary prospectus to list on the TSX Index. The company aims to price the offering at between $12-15 per share and raise proceeds of $255-$293M.
ABC Technologies is a leading manufacturer and supplier of custom, highly engineered, technical plastics and lightweighting innovations to the North American light vehicle industry. It was founded in 1974 and serves more than 25 original equipment manufacturer (OEM) customers globally through a strategically located footprint.
In effect, this is an autoparts manufacturer that provides a range of products such as the ones below:
In terms of performance - let's just say this is not a high growth company. Here is a snapshot of the company's revenue and EBITDA growth over the past few years.
This is not entirely surprising. The auto industry is one that is cyclical and very few are considered high growth companies. Upon completion of the offering, ABC Technologies Holdings will have 52,522,392 common shares will be issued and outstanding, valuing the company at $709M at the proposed offering mid-price range.
That would give it a P/S ratio below 1 (0.68) and and EV/Ebitda ratio of around 6.52. In comparison, all of the TSX-listed autoparts manufacturers are currently trading at a P/S ratio below 1 with a range of 0.39 (Martinrea) to 0.89 (Magna). They also trade at EV/EBITDA's of between 6.98 (Linamar) and 12.44 (Magna). Considering Magna is best it class, it deserves these premiums.
Overall, I'd consider the company to be fairly priced at the mid-range of the offering. Given this, I don't see particularly strong demand for this offering, but we will provide an update once it prices.
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News Release
ABC Technologies Holdings Inc. Files Preliminary Prospectus for Initial Public Offering of Common Shares
Not for distribution to U.S. news wire services or dissemination in the United States
January 26, 2021 02:04 PM Eastern Standard Time
TORONTO–(BUSINESS WIRE)–ABC Technologies Holdings Inc. (“ABC Technologies” or the “Company”) announced today that it has filed with the securities regulatory authorities in each of the provinces and territories in Canada, and obtained a receipt for, a preliminary long-form prospectus (the “Preliminary Prospectus”) for a proposed initial public offering of common shares (the “Offering”). The Offering contemplates an offering of common shares of ABC Technologies by ABC Group Canada LP, which is directly and indirectly owned by an investment fund managed by Cerberus Capital Management, L.P. The number of common shares to be sold and the price per common share have not yet been determined.
The Offering is being made through a syndicate of underwriters led by Scotiabank, BMO Capital Markets and J.P. Morgan as lead underwriters.
The Preliminary Prospectus contains important information relating to the Offering and has not yet become final for purposes of a distribution of securities to the public. No securities regulatory authority has either approved or disapproved the contents of this news release. This news release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale or any acceptance of an offer to buy these securities in any province or territory of Canada prior to the time of receipt for the final prospectus or other authorization is obtained from the securities regulatory authority in such province or territory. Copies of the Preliminary Prospectus may be obtained from any of the Underwriters and will be available under ABC Technologies’ profile on SEDAR at www.sedar.com.
The securities under the Offering have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States and may not be offered, sold or delivered, directly or indirectly, in the United States or to, or for the account of benefit of, U.S. Persons (as such term is defined in Regulation S under the U.S. Securities Act), except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or solicitation of an offer to buy any of these securities in any jurisdiction in which the offering or sale is not permitted.
About ABC Technologies
ABC Technologies is a leading manufacturer and supplier of custom, highly engineered, technical plastics and lightweighting innovations to the North American light vehicle industry, serving more than 25 original equipment manufacturer (“OEM”) customers globally through a strategically located footprint. ABC Technologies’ integrated service offering includes manufacturing, design, engineering, material compounding, machine, tooling and equipment building that are supported by an experienced engineering team of approximately 600 skilled professionals and 6,150 employees worldwide. The Company operates in six product groups: HVAC Systems, Interior Systems, Exterior Systems, Fluid Management, Air Induction Systems and Flexible & Other.
Forward-Looking Statements
This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control. Such risks and uncertainties include, but are not limited to, failure to complete the Offering and the factors discussed under “Risk Factors” in the Preliminary Prospectus. Actual results could differ materially from those projected herein. ABC Technologies does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.
Contacts
Nathan Barton
Investor Relations
investors@abctech.com