San José: the takeover bid that never comes and the missing free float
Grupo San José trades at 3 euros despite being attributed a far higher value. Its almost non-existent free float and its debt explain why a takeover bid never arrives.
English · Original discussion in Spanish · Published
San José: four years waiting for a takeover bid that never comes
There are stocks that trade and others that simply hold on. Grupo San José has spent 1,782 days in the second category: the length of a stock market debate over a Spanish construction company attributed a value far above what the market grants it, and which still fails to take off. The share hovers around 3 euros</B> when years ago it traded close to 5. The question hovering over every quarter is always the same: if it is worth more than 12, why does it trade at 3?
The trigger for the latest stretch was an analysis which, according to one participant, put the company at a 25% discount to its share price. In other words, even the most optimistic document assumed the market undervalues it, without daring to set a date for the correction.
The free float that explains almost everything
The argument repeated most often is structural: the free float is almost non-existent. With a core group of shareholders controlling most of the capital, trading volume on some days does not even reach 10,000 euros, according to claims in the debate. That turns any entry or exit into an exercise in patience, and explains why the share can spend months dragging along with nobody making a move.
Some argue that this same core of shareholders has a perverse incentive: keeping the price depressed to issue new shares at rock-bottom prices and then capture the entire rise. The thesis, often repeated among those trinc the stock, points out that they have kept the share flat for two years precisely so that the capital increase makes sense. It is not a formal accusation, it is a suspicion that circulates and that nobody has disproved with data.
Debt that won't fall and cash flow that keeps shrinking
The numbers laid out in the discussion of the stock do not help. Long-term debt rose from 100 to 102 million in six months, according to the financial statements the company itself publishes. Operating profit fell from 16 to 15 million over the same period, while depreciation rose slightly, something to be expected at a construction firm.
The uncomfortable conclusion drawn from this picture: without any shocks, it would take around eight years to pay off all the debt, according to a calculation circulating in the debate. And that in an environment where borrowed money is no longer free. The full calculation, line by line, leaves a narrower margin than the company's official narrative suggests.
The ghost of Realia and the MásMóvil precedent
The comparison with Realia comes up several times: a listed company kept artificially cheap until someone launches a squeeze-out bid and takes over everything at bargain prices. The other precedent cited is MásMóvil, where, according to one participant, the management team allegedly struck a favourable deal before the takeover, trinc by a complaint over conflict of interest, and where minority shareholders ended up with a minimal gain.
One simple fact weighs against the imminent-takeover thesis: if the business were that good, the majority shareholder would buy more or the company would buy back shares. It doesn't. And to many, that smells like a dud.
Country risk and the final blow of low volume
There is a camp that simply rules out the stock because of where it is listed: don't touch anything quoted in Spain, for antiestéticar of a repeat of MasMóvil or any corporate manoeuvre that leaves minority shareholders empty-handed. It is an extreme position, but it sums up the accumulated fatigue well.
The other front is sectoral: with raw materials sky-high and public works depending on the national budget, the construction company is exposed to any slowdown. The memory of the 1991 crisis, when a company with state contracts went under and left tens of thousands of people jobless, still weighs.
Is it worth waiting for someone to put a price on what the company claims to be worth? Four years on, the answer remains the same: it depends on how long your wallet can hold out.
There are stocks that trade and others that simply hold on. Grupo San José has spent 1,782 days in the second category: the length of a stock market debate over a Spanish construction company attributed a value far above what the market grants it, and which still fails to take off. The share hovers around 3 euros</B> when years ago it traded close to 5. The question hovering over every quarter is always the same: if it is worth more than 12, why does it trade at 3?
The trigger for the latest stretch was an analysis which, according to one participant, put the company at a 25% discount to its share price. In other words, even the most optimistic document assumed the market undervalues it, without daring to set a date for the correction.
The free float that explains almost everything
The argument repeated most often is structural: the free float is almost non-existent. With a core group of shareholders controlling most of the capital, trading volume on some days does not even reach 10,000 euros, according to claims in the debate. That turns any entry or exit into an exercise in patience, and explains why the share can spend months dragging along with nobody making a move.
Some argue that this same core of shareholders has a perverse incentive: keeping the price depressed to issue new shares at rock-bottom prices and then capture the entire rise. The thesis, often repeated among those trinc the stock, points out that they have kept the share flat for two years precisely so that the capital increase makes sense. It is not a formal accusation, it is a suspicion that circulates and that nobody has disproved with data.
Debt that won't fall and cash flow that keeps shrinking
The numbers laid out in the discussion of the stock do not help. Long-term debt rose from 100 to 102 million in six months, according to the financial statements the company itself publishes. Operating profit fell from 16 to 15 million over the same period, while depreciation rose slightly, something to be expected at a construction firm.
The uncomfortable conclusion drawn from this picture: without any shocks, it would take around eight years to pay off all the debt, according to a calculation circulating in the debate. And that in an environment where borrowed money is no longer free. The full calculation, line by line, leaves a narrower margin than the company's official narrative suggests.
The ghost of Realia and the MásMóvil precedent
The comparison with Realia comes up several times: a listed company kept artificially cheap until someone launches a squeeze-out bid and takes over everything at bargain prices. The other precedent cited is MásMóvil, where, according to one participant, the management team allegedly struck a favourable deal before the takeover, trinc by a complaint over conflict of interest, and where minority shareholders ended up with a minimal gain.
One simple fact weighs against the imminent-takeover thesis: if the business were that good, the majority shareholder would buy more or the company would buy back shares. It doesn't. And to many, that smells like a dud.
Country risk and the final blow of low volume
There is a camp that simply rules out the stock because of where it is listed: don't touch anything quoted in Spain, for antiestéticar of a repeat of MasMóvil or any corporate manoeuvre that leaves minority shareholders empty-handed. It is an extreme position, but it sums up the accumulated fatigue well.
The other front is sectoral: with raw materials sky-high and public works depending on the national budget, the construction company is exposed to any slowdown. The memory of the 1991 crisis, when a company with state contracts went under and left tens of thousands of people jobless, still weighs.
Is it worth waiting for someone to put a price on what the company claims to be worth? Four years on, the answer remains the same: it depends on how long your wallet can hold out.
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (49 replies).
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