Stalprodukt SA – Weak Interest in the Tender Offer

Stalprodukt (STP) published a tender offer on July 1st for 415k shares at 240 PLN/share – totaling a maximum of 100 mpln and 10% of the outstanding shares. This represented a premium of just under 10%. This equated to a valuation of approximately P/TB 0.34, EV/EBITDA 2.9, and EV/S 0.29 – in other words, a very low valuation. The purpose of the buyback was to redeem and reduce the company's share capital.

On August 1, 2024, it completed the purchase of 306,837 (74% of the tender) own shares. The number of outstanding shares (NOSH) will decrease from 5.4m to 5.1m, and TB/share will increase by 3.8% from 652.9 PLN/share to 677.8 PLN/share. See simplified balance sheets below.

The low interest might not be surprising given that the tender was just above the company's net cash per share of 203.5 PLN (pre-tender). If anything, the tender probably served as a liquidity event for shareholders who wanted to exit for some reason. It will be interesting to see who sold in the tender in the future. Likely, no major shareholders have reduced their holdings. See below for latest shareholder list.

Given the strong financial position, the company could advantageously initiate a new tender in the near future, albeit with perhaps a slightly more generous premium. Even if it were to take place at say 300 PLN/share (a 25% premium), it would – in our opinion – be attractive for long-term shareholders.

(Disclaimer: at the time of publication, the writer owns shares in the mentioned company)