By Equipe de Redação
Posted in July 7, 2022
The new company, created after the merger of Emergência and HPX, intends to gain space, mainly in the United States, with emergency services for environmental problems.
Brazilian company Ambipar is preparing to further grow in the international market, consolidating its presence in the environmental services sector. The group has reached an agreement for its subsidiary, Emergência Participações, to merge businesses with HPX, a special purpose acquisition company (SPAC), and thereby have its shares traded on the New York Stock Exchange (NYSE). The plan is to continue growing in a high-potential market driven by ESG metrics (environmental, social, and governance indicators).
The new company, which will have shares on the American stock exchange, will be called Ambipar Response. “We intend to continue this accelerated growth using M&A tools (mergers and acquisitions),” said Ambipar’s Chief Financial Officer (CFO), Thiago Silva, to Estadão/Broadcast.
In the twelve months ended on March 31, 2022, Emergência recorded a net revenue of R$ 1 billion. The company operates in Brazil and abroad, with over 10,000 clients in Latin America, North America, and Europe. It operates on a subscription basis for emergency response readiness and scheduled services. In 2021, they performed 28,000 services. A common example of their response is incidents involving the overturning of trailers with hazardous chemicals. The division works to mitigate damages and prevent an environmental accident.
“Outside the Rio-São Paulo axis, Brazil still has poor road infrastructure, and these accidents are common, dozens per day. As a result, we have become a global reference in this area. We started expanding to Peru, Chile, Colombia, and later to other places, including the United States and the United Kingdom,” said Silva.
According to the executive, with the agreement to reach the NYSE, Response will have access to more attractive capital costs. It should also expand its customer base, including industrial clients. “Although the United States has a much more diversified transportation offering, they also have incidents and will need our know-how, including in industrial sectors such as silos, for example.”
Silva stated that the company has no direct competitors in Brazil with a nationwide presence. In the United States, there are major players that provide this type of emergency service, but not as their main business, giving Response significant growth potential.
“The announcement is an important milestone for Ambipar to unlock value and accelerate its inorganic expansion abroad. Response will also have an improvement in its corporate governance, with the presence of HPX members on its board and C-level structure,” point out analysts Antonio Junqueira and Guilherme Bosso in a Citi report.
After the completion of the deal, announced on Wednesday, 6, Response will have an estimated value of approximately R$ 3.1 billion and an estimated net worth of R$ 2.9 billion. According to Ambipar, the business combination is expected to generate a capitalization of US$ 168 million for Response, potentially reaching up to US$ 415 million if there is no share redemption by current HPX shareholders. The resources from the merger will be used to accelerate the company’s organic and inorganic growth.
Ambipar will have about 71% control of Response, with 96% of the voting rights. The expectation is that the share price will reach US$ 10, with an exchange rate of R$ 5.30. “The minimum cash is guaranteed and signed with investors. We are already anchored,” said Silva.
SPACs have been gaining more prominence, especially in sectors with high levels of innovation, but operations concluded in recent months have faced challenges amid global market uncertainties. However, the Ambipar executive emphasizes that Response has a solid case. “The company generates cash and has an attractive ROIC (return on invested capital). We believe it will have significant performance, with cash flow already coming from the North American market. Response is solid,” evaluated the executive.
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