On Tuesday, Berenberg reaffirmed its Buy rating on Talanx (ETR:TLXGn) (TLX:GR) (OTC: TNXXF) with a price target of EUR91.10, following the insurer's recent strategic move in Poland. Talanx disclosed its intention to fully acquire its jointly-held insurance units in Poland from its partner Meiji Yasuda Life by the end of 2025.
The transaction involves Talanx buying a 24.9% stake in Warta and a 50% less one share stake in TU Europa, which will increase Talanx's ownership in each to 100%. Berenberg anticipates this deal will have three main effects: an expected 2% increase in net profit and earnings per share (EPS) for the year 2027, a potential boost in liquidity should Meiji Yasuda Life opt to sell its remaining approximate 3.5% stake in Talanx, and a slight risk as Talanx’s solvency ratio may decrease by about 5 percentage points post-deal.
The financial institution regards the deal's valuation as attractive, noting it equates to a 10% return on investment (ROI). Moreover, Berenberg highlights that there are no execution risks associated with this transaction since Talanx already has full control over the two Polish units involved.
The acquisition is part of Talanx's broader strategy to consolidate its operations and strengthen its market position in Poland, a move that Berenberg suggests will benefit the company's financial performance in the long term.
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