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  • Nordnet Bank AB acquires EQ Bank: a good deal?

    Posted on May 17th, 2009 Peter Tjernström No comments

    The Swedish on-line broker and bank Nordnet Bank AB (NN B) announced on Friday, May 15 that it will acquire 100% of the shares in Finnish EQ Bank. Nordnet will pay 37.5 million EUR in cash for Finland’s largest on-line broker.

    EQ Bank made an operating loss of 6 million EUR on the year to December 2008 on revenues of 27.2 million EUR. The company has roughly 57.000 customers and employs 154 staff.

    Nordnet’s chief executive, Carl-Viggo Östlund, said that the deal is expected to contribute positively to Nordnet’s EPS by 2010.

    The deal values the loss-making EQ Bank at 1.4 times the revenue in 2008, a valuation in stark contrast to the one of major Swedish (profit-making) on-line brokers Avanza (AZA) and Nordnet itself. Avanza is currently valued at 6.1 times the revenue and Nordnet at 3.5. This difference naturally reflects other important valuation aspects, such as profit margins, risk exposure and growth potential.

    But it also shows that if Nordnet manages to turn EQ Bank around, it can increase the value of the acquired company to at least twice what they paid for it.

    Comment from Nordnet’s CEO (Swedish).

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