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MBH Corp accelerates pace of acquisitions as strategy develops

  • Frankfurt-listed but Britain-based group
  • The strategy is to acquire established companies with good market positions
  • Twelve deals so far in 2020

What it does

MBH Corporation is a buy-in business rather than a buyout specialist.

In short, it acquires well-run companies that have a long track record of success – sometimes in some ‘unsexy’ sectors.

Management is probably not so much looking for the exit as attempting to get to the next level; or is trying to secure the option to sell-up at some later date if it wants.

Crucially, while MBH provides the central administrative functions, the owners then carry on managing their creations.

All deals are done for paper – on an earnings accretive multiple of around five times earnings before interest and tax (EBIT) – and there is a perpetual share earn-in linked to the profitability of the company.

So, the model rewards long-term ownership and commitment.

MBH itself is a British public limited company that adheres to the gold standard corporate oversight of the UK Listing Authority.

How it’s doing

In December, MBH acquired Victoria Gosden Travel Limited (VGT), its 12th acquisition of 2020 and the fourth in the last six weeks.

VGT joins ADT Taxis in MBH’s transport vertical and boosts the pro-forma revenues of MBH group companies to GBP104mln for the financial year ending 2020.

In operation since 2002, VGT is a taxi and licensed private hire operator covering the Waverly, Hart and Rushmoor areas of the South-East of the UK.

The business has grown from just one vehicle into a 100-vehicle fleet now covering most aspects of passenger transport.

VGT joins ADT Taxis in MBH’s transport vertical and boosts the pro-forma revenues of MBH group companies to GBP104mln for the financial year ending 2020.

What the boss says: Callum Laing CEO

“This has been an incredibly productive year for us as a Group.

“VGT joining our other company ADT in the transport vertical is incredibly exciting and gives us a good footing to expand the fleet further in 2021

What the broker says

MBH Corporation Plc (FRA:MBH) received a price target upgrade from German broker GBC following its four acquisitions at the end of 2020.

GBC said that in its last note (in October 2020) it had assumed there would be only two more acquisitions in 2020, but with the recent activity, has adjusted its revenue forecasts upwards.

Earnings have been trimmed, though, due to the disruption from the COVID-19 pandemic with two lockdowns in the UK and the increased restrictions in New Zealand leading to some contract delays.

The new price target is 164p against 155p previously and is based on the higher sales now expected in future years. GBC also assumes that the delayed construction work comes through in 2021.

“Based on the current price level of EUR0.38 (34p), which is significantly lower, we continue to give the share a buy rating and see it as clearly undervalued.”

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