How expensively (cheaply) was Rimi Baltic valued

PLY Analytics co-founder Vitalij Šostak evaluated for Verslo žinios the price (€1.3 billion) at which Salling Group acquired the retail chain Rimi.

“Rimi Baltic’s EV/EBIT multiple, excluding lease liabilities, corresponds to 10.5x; including lease liabilities – 17x,” calculates V. Šostak. “A comparison of the multiples with regional retail businesses reveals that Rimi Baltic is fairly close to the current market valuation averages and looks fairly adequate in the context of the sector.”

Including lease liabilities, V. Šostak says that Rimi’s multiple was somewhat lower than that of direct peers. “In other words, there is a certain premium compared with TKM and Kesko and a certain discount compared with Axfood, Żabka, Dino, and ICA Gruppen in 2021.”

Meanwhile, the multiples excluding lease liabilities differ more significantly. “In this case, the Rimi Baltic transaction already demonstrates a significant discount compared with peers. From the examples provided, it is evident that in the case of Rimi Baltic there is a very large difference between the multiples when assessed with IFRS 16 lease liabilities and without them, considerably larger than for comparable companies,” notes V. Šostak. “This may indicate that, compared with peers, Rimi Baltic has substantially larger lease liabilities on its balance sheet relative to lease payments. Theoretically, this could mean that the lease terms are significantly longer.”

Read the full article in Verslo žinios: Kiek brangiai (pigiai) įvertinta „Rimi Baltic“.