Beam… Buyout or Value? (BEAM, DEO)
Beam Inc. (NYSE: BEAM) is trading higher after an article in the Daily Mail indicated the chance of a potential “imminent mega-bid” for Beam. Now that this is a pure-play, it may make more sense, but how much sense it…
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Beam Inc. (NYSE: BEAM) is trading higher after an article in the Daily Mail indicated the chance of a potential “imminent mega-bid” for Beam. Now that this is a pure-play, it may make more sense, but how much sense it makes would have to be based upon price. The rumored buyer is Diageo plc (NYSE: DEO) and the rumored price mentioned was $90 per share. That price does not seem to make much sense with the stock at $55.99 (with a market value already of $8.8 billion) and with a 52-week range of $42.30 to $65.48.
Gabelli & Co. noted on this one: “We expect BEAM to do $35M in 2012 EBITDA growing to $785M in 2013. We expect EPS of $2.40 growing to $2.70. We believe there could be more upside to the numbers if you see pricing come back next year.”
Another thing to consider is that Gabelli has only a $65.00 private market value on Beam based upon 15-times expected 2013 earnings. Even after seeing some $400 million in synergies, there is quite a difference between $65.00 and $90.00.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.