vince Posted March 21, 2019 Share Posted March 21, 2019 what are u doing with the proceeds from the 2 sales? Buyback with epsilon (ex-$1.9b debt repayment as guided) And then debt repayment with loyalty one. They'll need to do something about Corp debt if they sell loyalty one.. I basically eliminate it with sale proceeds + cash flows. How much EPS are you able to get? I feel like I am being generous on growth and credit and still don't see how it gets meaningfully higher. Doubt the stock works if GAAP EPS can't get close to $30. Haven't really done it in a while but your 25 was in my range if I remember correctly. I always had the problem of figuring out how much debt they would retire. But I do my valuation a little differently. For instance, lets assume that Ads will be trading at 8 times earnings after both dispositions and assuming they have conservative corporate debt. So you are starting at a 12 percent yield. Now you have to estimate what their earnings growth rate will be and how much of the earnings they will need to get that growth rate. Lets assume that they will grow earnings at a 10% clip and use 25% of their earnings to get that growth. So you will be left with a 9 percent yield on cost (12-3) and a 10% growth rate. Even with no multiple expansion you will end up with close to a 20% annual return. I don't have to guess what future multiple the market is going to put on the business cause i'm not paying 20-25 times. There is an extremely good chance that the multiple will not fall below 8 for any extended period if they are growing with good returns on incremental capital . And if that's correct, you only need 5-6 percent growth to realize a mid teens return. Link to comment Share on other sites More sharing options...
kab60 Posted March 26, 2019 Share Posted March 26, 2019 Clock is ticking... Who thinks Ed promised a bit too much once again? :) "Sure. I would say, now that we've moved officially into the process itself and NDAs are going out the door, based on the inbounds that we've seen over the last 8 to 12 months, there's a lot of interest that's out there, certainly, from the PE world as well as from the strategic side. So based on what I'm hearing, seeing and what our advisers are saying, this thing ought to move pretty quickly. There's not a lot of hair on this thing, so there's not a lot of intercompany relationships we've got to worry about and everything else, and the whole thing is going to be taken care off all at once. So I think that's going to happen pretty quickly. I mean, I'd be surprised if there's no announcement in Q1." (tue 4th of december 18) Link to comment Share on other sites More sharing options...
mwtorock Posted March 26, 2019 Share Posted March 26, 2019 Clock is ticking... Who thinks Ed promised a bit too much once again? :) "Sure. I would say, now that we've moved officially into the process itself and NDAs are going out the door, based on the inbounds that we've seen over the last 8 to 12 months, there's a lot of interest that's out there, certainly, from the PE world as well as from the strategic side. So based on what I'm hearing, seeing and what our advisers are saying, this thing ought to move pretty quickly. There's not a lot of hair on this thing, so there's not a lot of intercompany relationships we've got to worry about and everything else, and the whole thing is going to be taken care off all at once. So I think that's going to happen pretty quickly. I mean, I'd be surprised if there's no announcement in Q1." (tue 4th of december 18) i just hope he over promised on the timeline but not the price. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted March 26, 2019 Share Posted March 26, 2019 I'm confident we hear something soon about sale of Epsilon & the price is fair. Hoping for a large strategic buyer. CEO will have too much egg on face if not. Given his comments highlighted below: "Sure. I would say, now that we've moved officially into the process itself and NDAs are going out the door, based on the inbounds that we've seen over the last 8 to 12 months, there's a lot of interest that's out there, certainly, from the PE world as well as from the strategic side. So based on what I'm hearing, seeing and what our advisers are saying, this thing ought to move pretty quickly. There's not a lot of hair on this thing, so there's not a lot of intercompany relationships we've got to worry about and everything else, and the whole thing is going to be taken care off all at once. So I think that's going to happen pretty quickly. I mean, I'd be surprised if there's no announcement in Q1." (tue 4th of december 18) Link to comment Share on other sites More sharing options...
kab60 Posted March 26, 2019 Share Posted March 26, 2019 I was mostly joking. I think it'll be fine but it does show he's too promo and optimistic. PE sit on a ton of dry powder, rate expectations have come down (cheap leverage), equity markets are fine (so strategics can justify a higher price), and if strategics are interested there should be sound competition. But it would be nice if it came sooner rather than late if the environment changes for the worse. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted March 27, 2019 Share Posted March 27, 2019 Also, On Feb 7th 2019: CEO Ed Heffernan: "Initial bids have been received and we are currently finishing selection of final bidders" Link to comment Share on other sites More sharing options...
LowIQinvestor Posted March 27, 2019 Share Posted March 27, 2019 I'm not options expert but there were some weird CALL buying yesterday in ADS. Link to comment Share on other sites More sharing options...
abitofvalue Posted March 28, 2019 Share Posted March 28, 2019 So tomm is D-Day or will Ed be surprised by no announcement in Q1. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted March 28, 2019 Share Posted March 28, 2019 Buckle Up! Link to comment Share on other sites More sharing options...
LowIQinvestor Posted March 29, 2019 Share Posted March 29, 2019 ADS just spiked higher on heavy volume What is the news? Link to comment Share on other sites More sharing options...
LowIQinvestor Posted March 29, 2019 Share Posted March 29, 2019 https://www.bloomberg.com/news/articles/2019-03-29/alliance-data-unit-said-to-draw-publicis-goldman-and-advent-duo Link to comment Share on other sites More sharing options...
kab60 Posted March 29, 2019 Share Posted March 29, 2019 Somebody actually believed Ed was gonna deliver :) Link to comment Share on other sites More sharing options...
kab60 Posted March 29, 2019 Share Posted March 29, 2019 And it seems like Ed leaked it! PE against strategic - nice move to leak and hope for one desperate bid: Alliance Data Systems Corp.’s Epsilon marketing unit has attracted bids from French advertising giant Publicis Groupe SA as well as a joint offer from Advent International and Goldman Sachs Group Inc., people familiar with the matter said. The company could select a winning bidder as early as next week in an auction that could fetch about $5 billion, said the people, asking not to be identified because the deliberations are private. There’s no guarantee an agreement will be reached and the bidders may still decide to walk away, the people said. Representatives for Alliance Data, Publicis and Advent declined to comment. A representative for Goldman Sachs, which would likely bid with its private equity unit, didn’t respond to a request for comment. Link to comment Share on other sites More sharing options...
abitofvalue Posted March 30, 2019 Share Posted March 30, 2019 $5B would not be a bad outcome.. if they can get there. not great imo at 10x-ish but could have ended up so much worse. At $5B that would fund a nice $3B buyback... and if they do announce next week, maybe Ed can gain a little bit of credibility. Link to comment Share on other sites More sharing options...
kab60 Posted April 1, 2019 Share Posted April 1, 2019 Will be some interesting days for sure. Publicis released a statement and it isn't exactly well received by the market: https://finance.yahoo.com/news/french-ad-firm-publicis-talks-105304485.html Link to comment Share on other sites More sharing options...
mwtorock Posted April 1, 2019 Share Posted April 1, 2019 Will be some interesting days for sure. Publicis released a statement and it isn't exactly well received by the market: https://finance.yahoo.com/news/french-ad-firm-publicis-talks-105304485.html Usually the leaks over weekend produce deal announcements monday morning. Hmmm, something different here... Link to comment Share on other sites More sharing options...
abitofvalue Posted April 1, 2019 Share Posted April 1, 2019 down 5% is not a good sign.. we'll see. If this leak was ADS orchestrated (and it seems likely to have been).. wouldnt it be typical of ADS' shambolic communications strategy. Be optimistic and over promise then disappoint and then meet your optimistic projection only on a much delayed timeline after the market has started to loose patience. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted April 1, 2019 Share Posted April 1, 2019 I think the fact that Publicis is down 4% indicates that there is a chance this deal happens at the indicated price. Positive for ADS. Link to comment Share on other sites More sharing options...
abitofvalue Posted April 5, 2019 Share Posted April 5, 2019 https://nypost.com/2019/04/05/buyout-firm-exits-epsilon-auction-leaving-goldman-to-bid-alone/ Advent exits Epsilon auction... interesting that GS may still go at it alone. Link to comment Share on other sites More sharing options...
freddy02 Posted April 14, 2019 Share Posted April 14, 2019 "Publicis Groupe SA agreed to buy digital marketing firm Epsilon from Alliance Data Systems Corp. for $4.4 billion in cash, propelling the French advertising group further beyond a weakening conventional ad business in its biggest takeover yet." https://www.bloomberg.com/news/articles/2019-04-14/publicis-to-buy-alliance-data-systems-corp-s-epsilon-unit Link to comment Share on other sites More sharing options...
abitofvalue Posted April 14, 2019 Share Posted April 14, 2019 ADS is talking about a $3.5B after-tax cash amount... after the debt paydown they planned thats $1.6B towards repurchases. I suspect many were hoping for more.. Link to comment Share on other sites More sharing options...
kab60 Posted April 14, 2019 Share Posted April 14, 2019 I'm fine with the price. I was afraid it could fall apart due to weak Epsilon results. One could always want more but they're selling a no growth asset for 10xebitda. Delever, buyback and then put the next asset up for sale. 1,6b towards buybacks post close in Q3 along with FCF along the way should be enough to retire 20-25 pct. of shares outstanding. Hopefully the share price stays put or falls. Link to comment Share on other sites More sharing options...
mwtorock Posted April 15, 2019 Share Posted April 15, 2019 well the price is not really cheering. my estimate was 3.6B -4.8B, and it landed on the low end... let 's cut debt and buy back stocks and put the whole company to the block for sale (maybe after spin off LoyaltyOne). I still like spin off more than asset sales. I mean look at the tax bill on this... Link to comment Share on other sites More sharing options...
AzCactus Posted April 15, 2019 Share Posted April 15, 2019 Seems like the market was expecting a higher price as well. Looks like the stock is down big early this morning. Link to comment Share on other sites More sharing options...
frommi Posted April 15, 2019 Share Posted April 15, 2019 Is there a way to estimate how much of the book value belongs to Epsilon? (I want to estimate how book value looks like after the transaction) Link to comment Share on other sites More sharing options...
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