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Burelle: A Growing Euro for 50 cents

March 12, 2013 | About:
Alejandro Vazqu

Alejandro Vazqu

Analysis of Burelle SA, a French holding company trading for half its NAV.

Ticker: BUR:PAR

Share price: EUR 317.5

Price target (NAV per share): EUR 615.54 (+94% upside)

Disclosure: Long Burelle.

Burelle, A Growing Euro for 50 Cents

Rating: 4.9/5 (14 votes)


Kjelllandsberg - 1 year ago
Maybe I am wrong, but it seems to me that the whole story changes, when you compare enterprise values:

EV Plastic Omnium:

Mkt Cap: 1826

Total Debt: 823

Cash: 227

EV= 1826+823-227= 2421

EV Burelle SA:

Mkt Cap: 614

Total Debt: 792

Minority Interest: 309

Cash: 232

EV= 614+792+309-232= 1483

As Burelle owns 56% of Plastic Omnium, that makes an proportionate Enterprise Value of 0,56*2421= 1355

+ 70 Mio Book Value of the Real Estate component, Sofiparc

+ 35 Mio Private Equity Firm

in total: 1355+70+35= 1460

so there seems to be no undervaluation.

Alejandrovazqu - 1 year ago

Hi Kjelllandsberg,

Thanks for the comment. I also like to look at companies in an EV basis but I think there is a flaw in the calculation of the EV in Burelle.

In my opinion, you are effectively double-counting the debt as Plastic Omnium is consolidated in Burelle. In reality, Burelle as a parent company is only financed by equity and has the stake in Plastic Omnium, Sofiparc and the private equity firm as its only assets. It does not guarantee Plastic Omnium’s debt.

If the stake in Plastic Omnium was 49.9% and not consolidated, Burelle would not have Plastic Omnium's debt on its balance sheet and the whole picture would look much clearer. The fact that the stake is 56.1% and not 49.9% does not change the economic rationale.

Please let me know your thoughts as I think it was a very interesting comment.


Kjelllandsberg - 1 year ago
Hi Alejandrovazqu,

you are right, I was not familiar with the accouting principles of holding companies. As long as Burelle hasn´t co-signed on the debt, they are not liable for the debt. And in case of bankruptcy of Plastic Omnium Burelle would only have to write off their equity stake.

But do we know that Burelle hasn´t co-signed the debt?

Kind regards

Alejandrovazqu - 1 year ago
Sure, they don't guarantee the debt. On top of that, the stake in Plastic Omnium makes up for most of Burelle's assets so in case of Plastic Omnium defaulting, there wouldn't be much value in it.

In reality, buying Burelle is buying Plastic Omnium with a huge discount


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