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at just 2.5-2.8% per year while revenue growth continues to run at 8-9%. In this case, there should be no additional price competition, in contrast to what we would see alongside organic space growth.
The impact on companies will depend on the deal price tags and how smoothly integration proceeds. However, we point out the strikingly lower deal multiples relative to the last wave of M&A in 2010 (an average EV/S of 0.3 now versus 0.8 a decade ago).
On these terms, the deals can generate an ROI of more than 15%, versus the 17% of organic expansion. We are positive on Magnit: assuming no deal-related ROI distortion, its multiples should at least stay at the current levels, while the EBITDA and revenue contribution from the acquisitions should boost its overall valuation.
We are less upbeat on Lenta, which does not have an integration track record. Its deal could prove ROI-dilutive and keep the company from unlocking its FCF potential. This year, M&A is set to account for two thirds of the space Lenta adds, and this could remain the case going forward given the company's ambitions to double revenues by 2025.
49 RUSSIA Country Report July 2021 www.intellinews.com