From: lanreder@oscargruss.com At: Jan 20 2015 15:51:08Subject: Fwd:OWW Initial Thoughts on Valuation
OWW - Report of potential sale possibly driven by Par Management which owns 14.9% S/O; they sold ~8.1M shares in August 2013 for between $8.95-$11.88/share. Five year high price (excluding PAR Capital sale s price spike) was ~$10/share. Recent Internet Based Services transactions (OPEN, MOVE and TRLA) are not much help; OPEN had 40% EBITDA margin (vs 17% for OWW), MOVE had 20x EV/EBITDA and 40x P/E multiples (compared to 7x and 24x for OWW at prior 20 day $8.60/share average closing price) and TRLA is a strategic merger priced at 47x EV/EBITDA and 252x P/E (note: all multiples are CY15E). Direct comps are EXPE and TRIP; PCLN is a cult stock and its $58B market cap makes it a bad comp. Assuming $25M savings (6% of Revs), P/F OWW would have $192M EBITDA and $0.51 EPS). Based on prior 20 average price, the TRIP multiples (13.7x EBITDA, 24% margin, 29x P/E) implies takeover values at adjusted $192M EBITDA and $0.51 of $22.00 and $14.75 (both unlikely takeover prices by a PE buyer). The EXPE multiples (7.4x EV/EBITDA, 16.5% margin and 18.5x P/E) imply takeover prices of $10.95 and $9.40. So marginal at the current trading level unless the PE has other internet-based businesses to which greater synergies can be realized.
KYAK (purchased by PCLN for $40/share value in mid-2013) sizewise better comp, higher margins - Forward $96M EBITDA (22.4% margin) and $1.15 EPS implied takeover multiples of 16.3x EV/EBITDA and 35x P/E. The P/E multiple implies $12.50/share takeover price. However, PCLN was a strategic buyer (rather than a PE) and the margins were higher; a 30x P/E multiple implies $10.80/share takeover price for OWW.
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From: LAURA ANREDER (OSCAR GRUSS & SON IN) At: Jan 20 2015 21:52:01