RE:RE:DCM Comp RRD gets competing Bid Not sure I would take out lease liabilities from the Value of DCM... Just part of regular ongoing operation that every business deals with... Nevermind the new accounting rules that forces businesses to list them as liabilities/debt? I would add that 42M$ back for almost an extra buck a share.
Bezostothemoon wrote: Great to see yet another bid for RRD. I believe the big institutions are starting to get involved because they see value in this industry despite often being overlooked at the retail level. In fact, it wasn't long ago when RRD was trading at $4 and a much lower valuation.
The most recent bid comes at a +75% premium on the stock as of October 10th. While a global company, RRD also has over 1.7B in debt and offers fewer tech-enabled services than DCM.
I could see DCM being a future target down the pipeline for other PE/Institutions or even the other institutions who lost out on the RRD bid. As DCM continues to pay off their debt, layer in technology and create a bigger business, there is no reason to think the company couldn't attract interest from institutions.
Looking at this as a possible investment strategy is interesting given how undervalued DCM currently is. If DCM were to get "bid on" at the same EV/EBITDA valuation RRD is trading at, DCM would be valued at:
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RRD currently trades at 7X EV/EBITDA
DCM EV is 145.4M (taken from the latest GPFO presentation) and had 41.5M in 2020 EBITDA
DCM/41.5= 7
DCM=7*41.5
DCM=290.5
Taking out: Net debt, Provisions & pension and Lease liabilities we get (taken from the latest GPFO presentation)
MC=290.5- 36.5-10.3-42.8
We get Market Cap of 200.9M
Market Cap/Shares outstanding= 200.9/49.9M
=Share price of $4.025
As you can see, there is a lot of value in this transaction. I am excited to see what happens in the future.