I'm hoping that this is just one of the multiple (strategic) options that the Sky Exec are considering......
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net debt yes more or less, $100m
i guess it all comes down to how much SKY pay for it, which drives how they finance it, and what that does to its proforma capital structure. if you inherit $100m of debt, and get some earnings, but use some existing cash, how does that constrain your ability to capital returns and dividends etc. synergies, both financial and operational, will no doubt feature heavily in any investor prez SKY wind up doing. devils in the detail which we dont have yet
https://www.nbr.co.nz/-18/
According to this mediaworks is independently valued at $150M.
Well that dovetails nicely with…ALL OF OUR CASH!!
And then there is the debt issue…
When QMS merger with Mediaworks in 2018
The merger implies a blended EV/EBITDA multiple of 10x forecast CY18 EBITDA (pre-synergies) for the QMS NZ businesses. QMS NZ is budgeted to deliver an A$12.8m contribution to the QMS Media Limited group in FY19
I consider my sky shares a risky investment. I feel as though this acquisition could make it even riskier. They have ~100m debt as mistaTea said and not to mention the vast majority of their assets are intangible goodwill/brands. I note the similarities between this and NZME (minus the printing press). NZME makes money so why has mediaworks struggled for so long?
I haven't read the article properly or the stat accounts but the trick - and worry here - is whether the $150m is referring to the enterprise value (IE the value of the WHOLE company's capital - equity + debt) or value of its equity. Journalists often dont get the distinction right. If the $150m is the EV, then yes, ~$45m cash + the ~$105m net debt (or whatever it is). If the $150m is the equity value, then you are paying $150m for the equity ontop of inheriting the debt. My super quick glance of the NBR article had some SP #'s - some slueth could quickly multiply the SP$ against the # of shares on the companies office, and if that is or close to $150 you have your answer ($150m on top of the debt of ~100m)
I doubt sky would pay nzd150m and assume debt. Mediaworks TV arm was sold for peanuts (and possibly without debt). If Sky is able to pick up the remainder of Mediaworks for peanuts, I think Sky would be in a better position and possibly gain value here.
Sky might turn out to be like the enterprise in the Sucession series, all it needs to do is buy Rainbows End.
Yes I believe the $150M would be equity value.
GAAP loss is not relevant because the depreciation /amortisation charge is way high ($27M). Stay in business CAPEX probably only $5M.
So the business probably produced Owner Earnings of $15M-$20M (a multiple of 7.5 - 10x).
FCF was around $15M.
No way are they selling this kind of earnings profile for $45M to Sky.