https://www.copyright link/street-talk/m-and-a-arb-funds-run-the-ruler-o...

https://www.copyright link/street-talk/m-and-a-arb-funds-run-the-ruler-on-ardent-leisure-s-sell-down-returns-20220520-p5an65

"“What am I missing here?” asked the Barrenjoey sales traders after they were steered toward the Ardent Leisure share price, which closed last week at $1.24.

Ardent’s sale of its US business, Main Event, had just been given the all clear by antitrust regulators, and the share price would suggest the market’s ascribing almost no value to the company’s Dreamworld business, either as a going concern or in wind down.On Monday morning, the stock was even lower at $1.23.The trading has puzzled analysts, while putting it on the radar of opportunists and arbitrage funds.To recap, Ardent (and fellow Main Event owner RedBird Capital Partners) have secured $US835 million for their business from American trade player David & Buster. Ardent’s slice of the proceeds are $US487 million.After anti-trust clearance, all that is remaining is the formality of the shareholder vote.But that formality doesn’t appear to be reflected in the share price. The Main Event sale alone is set to net Ardent shareholders a 90¢ distribution and a 31¢ cash retention.In other words, a $1.21 total return for each share looks on the cards.The 2¢ residual is then effectively the residual value ascribed to the Dreamworld theme park.Admittedly, Dreamworld has had its troubles, including a tragic accident in 2016 and then a slump in ticket sales during the pandemic. But 3¢ does not compute with Dreamworld’s got 57 hectares of land.Barrenjoey analyst Nick McGarrigle says the Dreamworld land alone is worth at least 23¢ a share while the business is probably worth 83¢ a share if a $40 million EBITDA can be achieved (based on a 10 times multiple).McGarrigle calculated the numbers in an April 7 note that’s doing the rounds again, following last week’s positive antitrust ruling.The bottom line for arb funds is that Ardent Leisure costs $1.24 a share when on paper it could be worth $1.44 to $2, on conservative estimates.So, like Barrenjoey asked, what are we missing here? Well it looks like either an easy and obvious trade, or a potentially interesting break up play.Ardent Leisure chairman Gary Weiss has dramatically increased the value of Main Event."

40m of EBITDA sounds like a stretch given operating performance post accident..