Billion-dollar deal leaves D’Ieteren in hands of single family branch (update)

The Brussels holding company D’Ieteren, known among other things as an importer of Volkswagen and car glass repairer Carglass, will eventually, after seven generations, be owned by only one branch of the family: Nicolas D’Ieteren and his investment vehicle, Nayarit.

The latter is buying out his nephew Olivier Périer and his holding company, SPDG Group. This multi-billion-dollar operation includes a gift for small shareholders: a super dividend of 74 euros per share.

Operation of €4 billion

Specifically, Nicolas D’Ieteren (Nayarit) will acquire 16,7% of Périer’s (SPDG Group) shares for 223,75 euros per share. This will give the family branch of Nicolas D’Ieteren the majority (50,1%) of the listed holding company. The remaining 10,6% of D’Ieteren’s capital still held by Périer will be sold orderly over the next five years.

Nicolas D’Ieteren thus draws more power to move the company in the direction he wants while the additional cash will allow Périer to further develop the activities of his company SPDG, which specializes in the circular economy or sustainable development, and consequently is not immediately D’Ieteren’s main speciality.

The operation is accompanied by a one-time dividend of 74 euros per share, representing 33% of the company’s market capitalization.  The total cost is around 4 billion euros, and the whole operation raises some questions among financial experts.

At the expense of the small shareholder?

The Brussels holding company will finance a high dividend with 1 billion euros of cash, 1 billion euros of bank debt, and 2,2 billion euros of dividends from Carglass owner Belron, which in turn will take on an additional 3,8 billion euros of debt, increasing the company’s net debt to 8,9 billion euros after the operation.

In other words, Belron acts as a cash machine for the entire operation, but the largest vehicle glass glazier in the world has had such an operating profit margin for years that financial experts expect the company to be able to contain this additional debt ratio, thanks in part to the strong cash flow generation of the holding company. Or as D’Ieteren puts it: “But are confident in Belron’s repayment capacity, given the company’s profile in the past.”

But nothing should go wrong with Belron in the coming years, and there will not be resources to develop new initiatives, which could create additional pressure.

Super-dividend trick

However, financial experts frowned more on the trick of a super-dividend of 74 euros per share.  As a private investor in Belgium, you must pay 30% withholding tax on dividends paid out. So, you get 74 euros minus 30% or only 51.8 euros; the rest goes to the Belgian state.

Large players working through companies do not have to pay that 30% withholding tax on the share. Therefore, the question can be asked whether the whole operation is not used for an internal family scheme, where the company’s coffers are plundered, so to speak, so that they don’t have to borrow, while the small shareholders face tax discrimination and can say that the move was not developed in their interest.

However, shareholders still need to approve the operation at an EGM, which will likely take place this year. Given that the two family branches have a large majority, this will be a formality.

Solid half-year results

Still, according to the business newspaper De Tijd, just about all analysts see more pros than cons to the transaction and are giving a buy recommendation on shares, also because the holding’s operating results and prospects are very good.

D’Ieteren posted solid results in the first six months of the year. The holding company increased consolidated sales by 5.3% to 4.3 billion euros. Before-tax gives an adjusted consolidated profit of 585 million euros, more than 6% higher than a year earlier.

Moreover, in a declining automotive market, D’Ieteren Automotive increased its sales (+2.7 %) and its market share to nearly 24%. For the entire fiscal year, the automotive importer expects sales similar to those of the record year 2023.

However, some analysts also warn that the risks have increased and that it is appropriate to sell your shares before the distribution to avoid the tax bill. The stock fell sharply yesterday to around 2o4 euros (-10%). Before the results and deal were released, it was up +4% on the day and +25% since the beginning of the year. The FSMA also announced that it will analyze the ‘sudden rise’ in the share price on Monday. The average price target is 265 euros.

“Social conflict at Audi Brussels will have no effect on sales”

On the sidelines of its half-year results presentation, D’Ieteren, which imports Skoda, Audi, and Volkswagen brands in Belgium, also briefly reacted to the social conflict at Audi Brussels.

CEO Francis Deprez does not believe these problems will negatively affect D’Ieteren’s future sales. Deprez points to several promising models being launched in the second half of the year, such as the Audi A6 e-tron, of which many pre-orders have already come in.

Finance Director Edouard Janssen was a bit more cautious and sees a possible impact, especially should it come to a hard confrontation with Audi Brussels’s staff. But in the longer term, that effect is negligible, he added, referring to previous closures of car factories in Belgium.