The second and third largest funeral home firms in Spain are considering a merger according to this article from Reuters.  Santa Lucia’s subsidiary Albia and Mapfres’ subsidiary Funespana are the number two and three in funeral services in the country and are contemplating teaming up to become a company that would do about $229 million (U.S. dollars) in revenue.  For perspective, $229M in revenue would be about 90% of the size of U.S. based publicly traded funeral services company Carriage Services.

Santa Lucia and Mapfre are Spanish insurance companies that both own funeral services companies as subsidiaries.  It is estimated that about half of all Spaniards have a specific insurance policy to cover funeral costs so the vertical extension to funeral services is not unusual for these companies.

According to the article, Spain’s aging population will result in an increase in the number of deaths in the country by 12.9% over the next 15 years.  Also, according to the article, the five largest funeral companies in Spain have about a 34% market share of business, which according to Deloitte, is leaving opportunities for mergers and acquisitions.

Funeral Director Daily take:  I found this article pretty interesting.  Funeral service around the world is becoming more and more corporate as time moves on.  It is amazing to me that ever since Robert Waltrip bought his 2nd funeral home in Houston in the early 1960’s mortuary growth via acquisition has never really slowed down.

I enjoy extrapolating the numbers from articles like this and in doing so found out that Funespana is valued at 16.6 times its last years earnings.  That is a number very similar to Service Corporation International or Carriage Services from the U.S. public domain.

One interesting thing that the article pointed out to me is that in Spain funeral services public companies are considered “infrastructure” assets.  To me it is just another way of saying that they are valued by their steady cash-flow, just like utility companies or communications companies in the U.S.

Related:  The Motley Fool makes a case for investing in Australian public Death Care companies.  Read the article here.

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