Akka Launches a Mandatory Offer for Data Respons

/ March 10, 2020/ Akka, Automotive, M&A (large, with revenues above $50m), Norway

Akka has launched a mandatory offer for Data Respons (DR) that will provide shareholders the opportunity to sell their DR shares. The company has been active on the stock markets since the end of its tender offer on February 13, raising its stake from 72.9% to 78.1%. Akka is hoping to reach 95% of shares and launch a squeeze-out offer later one.

Data Respons is an expensive transaction with Akka offering NOK 3.7bn (~USD 388m) for the firm, which had in 2019 revenues of 1,867m (~USD 196m). The timing comes at a difficult time, with Covid-19 now expecting to bring worldwide economies in a potential recession.

Despite the timing and the price, Data Respons is an asset of quality. The company published good results in Q4 2019, surpassing for the first in its history NOK 500m in revenues (NOK 522m). Growth was 19%, half of which was organic. DR combines significant growth with profitability: its Q4 EBITA margin was 12.4%, up 150 bps. For the full-year, revenues were up 18% (12% organically), and the EBITA margin was 11.6%, up 200 bps.

Is DR exposed to the pending global slowdown? Data Respons has done well in the slowing German automotive sector thanks to its focus on digital in 2019. However, we think that market conditions in Germany and potentially the sharp drop in the oil price (for its Norwegian operations) will impact Data Respons. The question is by how much. Looking at the portfolio of DR, we think that the company will still over-perform the market.

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