UDG Healthcare takeover likely to proceed, says RBC Capital

by | May 13, 2021

RBC Capital Markets downgraded its stance on shares of UDG Healthcare from ‘outperform’ on Thursday as it lifted the price target to 1,023p from 940p, bringing it in line with the offer received by private equity firm Clayton, Dubilier & Rice, which it reckons will go through.
The bank said its leveraged buyout model implies that spinning off Sharp early and driving some cost synergies with Huntsworth could lead to a mid-20s internal rate of return for CD&R, implying that they could afford to pay more.

“However, with few large-enough private equity firms that own assets in this space, the UDG board recommendation, as well as little risk of unmanageable antitrust issues given the fragmented nature of the market, we continue to believe that shareholders will accept CD&R’s 1,023p/share bid,” RBC said.

“This becomes our new price target, with our rating falling to ‘sector perform’.”

UDG announced on Wednesday that it had agreed to be taken private by C,D&R in a £2.6bn deal.

Related articles

RBC Capital cuts Rentokil price target

RBC Capital cuts Rentokil price target

(Sharecast News) - RBC Capital Markets cut its price target on Rentokil Initial on Wednesday to 575p from 610p as it downgraded forecasts for forex and a greater back-end loading of TMX synergies, but said it believes the long-term story remains intact. The bank said...

Trending stories

Join our mailing list

Subscribe to our mailing list to receive regular updates!

x