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Investing.com - Kepler Cheuvreux downgraded Theon International PLC (THEON:NA) from Hold to Reduce on Wednesday, setting a price target of EUR24.00.
The downgrade follows Theon’s announcement of a debt-financed EUR268 million acquisition of a 9.8% stake in Exosens, which Kepler Cheuvreux notes will be executed at a significant premium to market price and fair value.
The research firm expressed concern that the acquisition adds short-term financial risks to Theon shareholders and dilutes the company’s prospective return on invested capital (ROIC).
Theon plans to launch an equity rights issue of approximately EUR115 million to partially repay the bridge loan for the acquisition, with its key shareholder committed to maintaining a 70% stake.
While Kepler Cheuvreux acknowledges that Theon anticipates demand outpacing current expectations for its products and key supplier, the firm believes premium growth multiples may already reflect this potential upside.
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