Arauco acquires industrial complexes in Mexico: maintains recommendation for Copec shares

Arauco acquired industrial complexes located in Durango and Zitácuaro, Mexico, Masisa's industrial assets in that country, in an operation valued at US $ 160 million.

Arauco acquires industrial complexes in Mexico
Arauco acquires industrial complexes in Mexico

As reported by the Banchile Inversiones Research Department, Arauco (COPEC forestry subsidiary) reported an amendment to its original agreement to purchase Masisa's assets in Mexico (announced in December 2017) to comply with the resolution of the antitrust authorities of that country. "The modified agreement will consider only two of the three industrial complexes originally included in the transaction," they say from the financial institution.

All in all, the entrance to Mexico increases the production capacity of Arauco wood panels by 6% (reaching 10 million m3 per year), which consolidates its position as the second largest producer of wood panels in the world.

The Manager of Corporate and Commercial Affairs of Arauco, Charles Kimber, said about the operation that "we are very happy with this new acquisition, which is part of our internationalization plan, which seeks to position Arauco as a global company and leader in the market. With this purchase, we would be expanding our presence in the panel market in North America, where we see very auspicious signs of upward trend of this type of products focused on the furniture and home industry "

EBITDA

The acquisition, states Banchile Inversiones, increases the consolidated EBITDA of COPEC by 0.6%. "We consider the agreement as neutral for the valuation of COPEC shares, the price paid (8.5x VE / EBITDA ex-synergies) is in line with the previous agreement that COPEC subscribed with Masisa to buy its assets in Brazil (for which paid a VE / EBITDA multiple of 8.6x in the case of assets with lower margins and utilization rates), and represents a discount of 12% in relation to the Duratex valuation (9.7x EV / EBITDA 2019e). agreement in relation to the market capitalization of COPEC (1.0% of the market capitalization), we do not expect this to have an impact on the price of the shares, we maintain our Neutral recommendation in COPEC ", concludes the financial institution.