DAVY VIEW

After many years of what felt like ‘waiting for Godot’, a Board recommended bid at €1.2bn was announced on Friday (July 24th). This implies an adjusted price/earnings multiple of approximately 17.9x and an enterprise value multiple of about 9.8x ICG’s EBITDA of €150.6m for the 12 months ended December 31st 2025. The bid, at €8 per share, is being funded by €455m of preferred equity issued to Global Infrastructure Partners (GIP), with BNP Paribas SA and Banco Santander SA having arranged a senior debt facility of €798m. The MBO team holds in aggregate approximately 23.7% of ICG shares and will contribute a significant proportion of the ICG shares held by the MBO team in the leveraged vehicle. We view the timing as favourable, with ICG having achieved its ambition of ownership of all vessels in service under the Irish Ferries brand over the last 18 months and significant share buybacks over the last few years, including almost 11% of the issued equity last year. Earnings are at record levels, albeit we have already noted our EBITDA 2026 estimates (€153.2m) have clearly increased risks and cost headwinds (probably in the c.€40m range) with fuel price disruption from the Middle East. Even then, c.70% of the business is freight with an automatic pass-through surcharge mechanism; the remainder is subject to supply/demand conditions in the market with the summer key. We believe the business is set up for another strong performance in 2026 with probably a single-digit-million EBITDA hit likely. Interims are on August 27th.