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Investing.com -- Shares of SZG dropped over 2% on Friday following reports that the company is contemplating a formal review of its bottling machinery business, KHS, which significantly contributes to its technology division’s profits.
Bloomberg reported on Thursday that the potential sale of KHS could help fund the steel business’s decarbonization investments, requiring a net of €1.2-1.4 billion, excluding the €1 billion in government support.
Jefferies analysts noted that while SZG has not officially responded to the press report, the valuation of KHS could be around €1 billion, or roughly 7.5x the expected 2024 EV/EBITDA.
Jefferies expressed a positive outlook on the possibility of SZG streamlining its operations, stating that the packaging machinery business does not currently receive a higher valuation due to its association with the steel business, which operates at a lower multiple.
Furthermore, Jefferies pointed out the lack of significant synergies between the steel and packaging machinery sectors, suggesting that a divestiture could be beneficial if it fetches the right price.
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