MAX Automation SE Announces Sale of MA micro Subsidiary to Hitachi Ltd.

MAX Automation SE has come to terms on selling its MA micro subsidiary to Hitachi Ltd., with an expected closing in the second half of fiscal year 2024. The sale price is set between €71.5m and €76.5m, dependent on MA micro's performance in FY24e.

MA micro, which has been considered a discontinued operation since the end of FY23, will integrate into Hitachi's JR Automation Technologies. This division leads in advanced automation and digital technologies for robotics systems integration. The completion of this transaction is contingent on standard merger control approvals.

The proceeds from this divestiture are designated primarily for reducing MAX Automation's financial liabilities, including a significant repayment of its syndicated loan, which had a balance of €120.8m at the end of FY23. This strategic financial maneuver is anticipated to lower annual interest expenses by €7.4m, potentially increasing earnings per share by 40%.

Despite a decline in MA micro's performance in the previous year, with decreases of 28% in revenue and 17% in EBITDA, the negotiated sale price—which represents an 11x EV/EBITDA sales multiple, 30% above the group's current valuation—suggests a strategic divestiture by MAX Automation.

The analysis reiterates a BUY recommendation for MAX Automation stock with a target price of €8.20 based on a discounted cash flow method.