Current numbers and potential.Looking at the numbers:
Once the deal closes - 101mil debt, aprox 133.5 mil shares outstanding.
Using CEO’s median estimates for Sangoma for 2021 combined with trailing numbers of Star2star we have Revenue 152 mil and Ebita 45 mil. I have estimated net income 15 mil to do the math.
To be clear this is just a quick evaluation of the deal right now without taking into account any potential growth.
Bottom line is a SP of $5.33, minus $0.75 debt (from the purchase) and $0.25 debt (acquired in the deal) gives us a share price of $4.33. I realize not all investors will subtract total debt from share price but I am conservative. Not to mention this deal will likely move the company over 500 million market cap and many analyst will revise multiplies upwards.
What I really like about the numbers is that they are a combination of the two separate entities. You can be sure Mr. Wignall did not get involved in a deal this big if the combined financial output was not going to surpass the sum of both companies. With both CEOs being “excited” about the deal, look for the synergies to shine after the merger with increased growth potential.
My biggest take away from reading the report is the international opportunity. Quote “the combination will enable Sangoma to deploy Star2Star's cloud solutions to its global customer base in over 100 countries, where cloud native solutions are relatively under penetrated and less competitive.”
Deploying high margin products in over 100 countries = $$$ Revenue
There has been lots of discussion about share price after the trading halt is lifted. For short term and momentum investors one can see their concern. For myself (and probably many others) I honestly don’t care if the share price opens at $3, $4, $5, etc. Once analysts and investors get a chance to ponder through the details and estimate potential growth, the share price will settle. I honestly expect analysts to boost target prices.
GLTA