Good points, and I agree re how management could do more on the communication front!
Re 2.5 times EBITDA:
My first comment would be, what would you pay up front, for a $100 a year payment, for the next 4 years? $250 upfront would be a reasonable discount I would think, for $400 over the next 4 years...
My second comment, would be that yes, for you or I buying the stores, its only the next 4 years of cashflow. However for TLS buying the stores, its cashflow basically into perpetuity! So a very different proposition.
In fact, that very issue is the very reason why you could buy TLS stores for 2-3 times EBITDA in the first place, because there was always the risk that TLS wouldn't renew that particular license...
My third comment would be, that even if we said ok, lets be super silly conservative, and lets say 1.5 times EBITDA, that is still a cheque for $120-125M, which would essentially mean no CGT tax, and VTG would still end up with $160M in the bank, which is well above current market cap...
But, I'm fairly sure Maxine wouldn't sign off on 1.5 times EBITDA... they would just rather keep the $300-$400M in EBITDA they will generate over the next 4 years right??
So it really doesn't matter how I dissect it, VTG looks mispriced to me...
Lastly: as you mentioned, VTG hasn't really excited investors for the last few years.. It has traded at an very low PE for the last few years, (circa 5-7 times pre the big TLS buyback announcement right?) and the reason for this was exactly this issue: the risk that TLS wouldn't renew.
That risk is now being removed, and with SHAW and lots of cash in the bank (with either a deal or no deal, they will still have lots of cash on hand!) they are masters of their own destiny so to speak, and will be repriced accordingly...
Looking forward and assuming a VTG broadly with no ICT at all, is a comparison with SLA reasonable?
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