Sales of ~SEK 20m, but with negative margins
This afternoon, Bredband2 announced the acquisition of Bredbandsson AB: a Swedish broadband operator with 7,500 private fiber customers and sales of ~SEK 20m. According to allabolag.se, the company generated EBIT of SEK -3.6m in 2023. The acquisition price in terms of EV is SEK 18.5m, implying an EV/sales multiple of 0.9x, and an EV/subscriber of SEK 2,500 (vs. BRE2 at SEK 4,000). The acquisition is expected to close on 1 Sep 2024.
Should be an accretive acquisition, assuming that margins improve
Based on the reported figures, we estimate the deal to be 1.2% accretive to 2024e sales and +1.5% accretive to the customer base at the end of Q2. Bredband2 has historically been good at finding clear cost synergies in M&A (including the acquisitions of A3, TH1NG and Stockholm Stadsnät), and we see no reason why this time would be different. If we assume that Bredband2 will bring Bredbandsson's margins to current Bredband2 levels, this would imply a price of 9x EV/EBITA. At the end of Q2, Bredband2 had a net cash position of SEK 85m, excluding leasing, so it will be able to finance the acquisition from its current balance sheet.