D'Ieteren Group (EBR: DIE), a Belgium-based automotive services company, experienced a change in stock rating by Jefferies, a global investment banking firm.
The firm downgraded D'Ieteren Group's stock from "Buy" to "Hold," and adjusted the price target to €225.00 from the previous €250.00.
The adjustment comes in response to the company's financial reorganization involving its family shareholder and its subsidiary, Belron.
The reorganization includes a substantial €4.0 billion dividend from D'Ieteren Group to fund the family shareholder reorganization.
The action will result in an additional €1.8 billion debt at the holding level. Furthermore, Belron, a vehicle glass repair and replacement group owned by D'Ieteren, will be recapitalized and will pay out a €4.3 billion dividend.
The move is expected to increase Belron's debt by €3.8 billion, bringing the total debt to €8.9 billion, which is approximately 5.5 times its EBITDA. The decision to recapitalize follows what has been described as a weaker performance in the first half of 2024.
The downgrade by Jefferies reflects concerns over the increased debt levels that D'Ieteren Group and its subsidiary will take on as a result of these transactions. The new price target of €225.00 is based on the sum-of-the-parts valuation method and aligns with the transaction price.
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