Ercros takeover bid at 3.60 euros settles real value dispute

Ercros: from 1.78 euros to a 3.60 euro takeover bid without agreement

What is happening with Ercros that a stock bought at 1.78 euros ends up receiving a 3.60 euro takeover bid, yet no one claims victory? The continuous market chemistry has been a battleground for years between two incompatible narratives, and the price has validated each in turn. An investor claiming to have held the position since 2015 peine a report stating the company had three divisions—two hit by the pandemic and one pharmaceutical division buffering the blow—and a fourth on the way, the bioplastics division, antiestéticaturing an "unique" extruder purchased for the project. He did not hide his bias: he sold half his position well above market price, bought back shares during the pandemic, and warned he would continue buying "below 3 euros whatever comes out."

What does Ercros do and why was it considered cheap?

The bullish argument relied on the fact that the pharmaceutical sector sustained the group while the rest of the products lived through the weakest cycle in twenty years. The future bet was a fourth bioplastics division, which would take between one and two years to become official within the organizational structure. The company had invested in R&D and acquired an extruder for these compounds, of which there are few.

The other pillar was the return to shareholders: 6 cents in dividends plus an equivalent amount in share buybacks, in a fiscal year the defender himself described as unfavorable. His optimistic scenario, assuming economic recovery: fifteen cents in dividends plus another fifteen in buybacks, meaning a total return of 0.30 euros annually per share.

Dividends, buybacks, and a 2.5% that does not convince everyone

The rebuttal arrived quickly with figures: a 2.5% dividend yield and a Debt-to-Equity ratio close to 50% are not enough for a yield-focused investor. "It's not bad as a company but I don't see it cooked," summarized one skeptic, who admitted holding no Spanish companies but kept the stock on watch.

The counterargument was that half of the return comes via buybacks, not dividends, and that buying at these prices one could aim for a 10-15% annual return across both channels over two or three years. All conditional: none of these figures were guaranteed by the company.

The price battle: from 4.10 in 2018 to 1.78 and back up

Here is the data that disorients anyone new. An investor admitted buying at 4.10 euros in mid-2018, the worst possible time. Another boasted of warning in September that those with patience would buy the same stock at 1.78 euros instead of 1.92 euros.

The dispute intensified when the stock hit lows around 1.81 euros and then, without transition, began breaking 3.70 euros with 7% gains in a single session. Those who had been asking for months what had broken now asked if it was worth entering expecting recovery. The cycle rules, and the cycle gives no warning.

Why does Ercros trade at 2.30 euros after touching 5 euros?

The most repeated diagnosis points to energy and raw material costs, above those of neighboring countries, and price competition with Chinese and Indian producers. A year in which more chlorine has been sold than in any other since the beginning of the century, yet the company fails to present accounts commensurate with sales, according to the harshest criticism.

The cited figures: the company expected to earn between 15 and 20 million euros until June, less than half of 2022. With this picture, the stock fell from almost 5 euros to 3 and then to 2.30. Cyclical company, small, with ten-cent spreads, reminded the more prudent: to put money here you must know the business well.

The 3.60 euro takeover bid and the account that does not add up

The outcome arrived in the form of an offer at 3.60 euros per share, which minority shareholders themselves describe as a squeeze-out takeover: if the buyer reaches 75% of the capital, it delists the company and those who stay are left with nothing. The 80% of shares are in minority hands, leaving the operation open.

The personal liquidation of one participant is the best summary of the matter: 10,094.64 euros invested in two batches, sold at 3.40 euros, and, between dividends, transaction costs, and selling prices, a loss of 736.48 euros over six years. Without counting inflation. Another sold, regretted it, and wondered if a second takeover bid would pay more.

Those who bought during the pandemic at fire-sale prices have multiplied. Those who entered at peaks still watch the screen. "In the end, time puts everyone in their place," said the value defender. Time, for now, has placed Ercros in a 3.60 euro takeover bid that also does not satisfy those who earn.