• SEK 100m run-rate sales contribution excl. sub-contractors
• Potential to earn 8-9% EBIT margin
• Acquired at ~4x EV/EBIT on potential earnings

Acquires Webstep AB at seemingly trough earnings

B3 has announced that it will acquire Webstep's Swedish subsidiary for an enterprise value of SEK 38m. In 2023, Webstep AB generated sales of SEK 142m but earned an EBIT margin of less than 1%, which is below its maintainable margin. Based on our understanding of Webstep's potential within B3's group structure, a sustainable EBIT margin of ~8-9% should be achievable. Such a margin was earned by Webstep AB in 2020, but we surmise that the cost base expanded to an excessive level in 2021-2022. Therefore, we assess that B3 has acquired Webstep AB at an EBIT multiple of ~4x based on potential earnings, which is below that of B3 Consulting Group's ~7x '25e EV/EBITA.

'25e-'26e EBITA up 7-5%

Following the acquisition of Webstep AB, we raise '25e-'26e sales and adj. EBITA by 8-6% and 7-5%, respectively. This acquisition helps B3 broaden its footprint in northern Sweden and in the Stockholm area, and it should help B3 accelerate its earnings growth once demand for IT consultants become better. It is also likely that the acquisition was done at trough earnings, meaning that Webstep AB was likely acquired below its intrinsic value with a 100% cash consideration.

Valuation

Based on our revised estimates, B3 is trading at ~7x '25e EV/EBITA, which is ~30% below peers, which are trading at a '25e EV/EBITA of ~10x.