cseriesaddick wrote: https://bfmbusiness.bfmtv.com/entreprise/le-projet-d-alstom-pour-racheter-a-bombardier-ses-activitesferroviaires-1846743.html So Alstom and Bombardier are dead serious? The article states that BT’s valuation is only 5 billion, which is not very high for a company that generates around 9 billion of gross revenues per year and has a back-log of near 36 billion. NBF:s estimate for BT’s EBITDA in 2021 is 846 million. It would take a year to close such a deal and get regulatory approval, so 2021 EBITDA is more relevant to assess BT’s valuation.
Using a multiple of 9 (industry’s multiple range between 7 and 12 and Alstom has a multiple of 10.5), We get a total value of 7.6 billion for BT.
But Bombardier is not in the driver seat, so let’s keep the 5 billion valuation for now.
The article states that CDPQ would accept to receive shares from Alstom for its stake in BT,so Bombardier would not have to pay them anything.
With this price of sale (5 billion), Bombardier would then receive 3.375 billion from Alstom (67.5%).
If we add the existing cash on hand (2.6 billion) and the proceed of sale of 1.1 billion from CRJ and Belfast sales, we get a total of 7.075 billion in equity.
What would then be Bombardier Aviation’s valuation once BT’s sale is closed?
According to NFB’s estimate, BA’s EBITDA in 2021 will be of 1.015 billion.
Using a conservative multiple of 7 for this division (industry’s multiples range between 8 and 10), I get a total value of 7.1 billion.
Now, if I add the equity of 7.075 billion to that amount, I get a total value of 14.2 billion.
By subtracting the debt of 9.3 billion from that amount, I get a net value of 4.9 billion.
4.9 billion divided by 2.387 billion outstanding shares = $ 2.05 US ($ 2.67 CAD)
If Bombardier gets an additional billion by selling its stake in ACLP to Airbus, the PPS increases to $ 2.47 US ($ 3.21 CAD)
I hope we can sell BT at a much higher price.