No. of Recommendations: 3
Hello nola622 or others following Liberty SiriusXM,
Was just looking at LSXMK numbers. Does this sound correct to you?
SIRI SP $3.71
LSXMK SP $23.2/8.4 (exchange ratio) = $2.76 (is this math correct?)
If the deal closes in Q3 and the SIRI valuation was to remain at Friday's close (it could be higher, or lower), a LSXMK buyer today would get a 34% gain (3.71/2.76). More likely it will be less than that.
Then as the new company, with a free float joins the S&P500, there is an additional potential and likely re-rating higher.
If the deal closes in Q3, but the SIRI valuation falls, to the current LSXMK valuation, a holder would own a low growth business trading at a FCF multiple of:
7.6X 2024E (analyst estimates, which assume the business does not fall off a cliff)
6.3X 2025E
5.5X 2026E (capex falls significantly according to management).
The business reports earnings on 1st August and should have an update on the approvals (the main time consuming one, is the SEC approval of the proxy, going to LSXM shareholders, to approve the deal.)
Berkshire reported selling a small number of shares, but may have since sold more. That is a worry. Maybe they can see new car sales numbers, or something else has changed their minds about the FCF potential.
The biggest risk, is that the business reports weakening performance on subscribers, cashflows and earnings.
SIRI's SP is up 35% in the past week, 44% in the past month. What is causing this? Short squeeze? Bounce of extreme lows?
EVBigMacMeal (currently down 13% on this deal.)
