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Author: GravityProof One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8891  
Subject: Altana Dividend Date: 3/23/2007 10:29 AM
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Hello! I've a request for help in evaluating a dividend-paying company.
Google Alerts tipped me off to something interesting:

Altana AG has sold its pharma business, and will be distributing the proceeds as a special dividend in May. Quoting: "Altana has announced a total dividend of €34.8 per share, consisting of a special dividend of €33 per share, an ordinary dividend of €1.3 per share and a bonus dividend of €0.5 per share."

Current share price is about €48. Backing out the pharma business, we see EBITDA of:

2006: €186
2005: €124
2004: €120
2003: €101
2003: €109

Sales were up 58% in the first 9 months of 2006 due to acquisition.

I'm having a tough time straightening all the numbers out--pulling out the Pharma stuff and just looking at the chemical business. The thing that's interesting to me is--by returning the money to shareholders, ROE will be unshackled. As ROE strengthens, the share price should perform well with what looks like a strong business underlying it.

The Q3 report indicates that for Q1-3 2006, earnings were 2.98, with 2.50 of that being from discontinued ops (pharma.) So .48/share, compared with .28/share in the previous year's period.

The basic, sloppy haven't-done-my-DD-properly thesis is: Buy the stock before it goes ex-div. Pull out the 72% dividend. Company should go to €14ish/share, if we just back the dividend out of the share price. With ROE free to grow, we should see the company's shares advance with its growth; but not rapidly.

The company forecasts growth of about 6% annually, and has a long history of raising the dividend. Growth rate over 5 years is 20%.

Can anyone suggest how to look at this?
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