Australian private equity firm Ironbridge Capital has made a $2.43 per share takeover for CanWest MediaWorks (NZ). Ironbridge Capital has an agreement with CanWest Global to secure their 70% shareholding. The offer of $2.43 implies an enterprise value of approximately $730 million and an EV-EBIT multiple of 14.
In March Valuecruncher estimated a mid-point valuation of $1.67 per share for CanWest MediaWorks but highlighted potential reasons for the stock trading over $2.00. One reason was the possibility of a private equity takeover offer arising from CanWest Global’s strategic review. Valuecruncher has re-run it’s March 2007 valuation from the private equity point of view. Based on the assumptions made in the analysis of the Yellow Pages transaction Valuecruncher has estimated a cost of capital (WACC) of 9% for a private equity firm acquiring CanWest MediaWorks. Based on the private equity assumptions Valuecruncher places a mid-point valuation of $2.50 a share with a range of $2.03 to $3.00, the Valuecruncher mid-point is slightly higher than the Ironbridge Capital offer of $2.43. Based on Valuecruncher’s analysis and recent private equity transactions we believe a private equity player could justify a higher offer but this is unlikely to eventuate given the lock-up agreement with 70% shareholder CanWest Global.