Comparison of RED and SLR - half year results are in, page-12

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BullishBearish

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11/03/24

10:33

Post #: 72837827
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Originally posted by TazD: ↑

Part 5: Cash and Implied Enterprise Value (EV) of each company

SLR has net asset of $421M on the balance sheet accounting for cash, working capital, RED shares and debt facilities including leases
RED has net liability of $125M on the balance sheet for the equivalent items

To calculate the implied Enterprise Value of the Scheme I am using the pre merger share price of RED of $0.33.

Market Cap of RED is $1.148 bn adjust for cash/wc/debt above implies EV of $1,273 bn
Market Cap of SLR based on 3.434 RED shares is $1.059 bn adjust for cash/wc/red shares/debt above implies EV of $638 bn

The deal implies that the Enterprise Value of RED is 2x SLR.
Including the hedge position in the Adjustment then

RED has implied $1,449 bn EV
SLR has implied $667 bn EV

Ratio is 2.17x

It would appear to me that RED is getting a seriously good deal but i don't see how this scheme will get through. Surely the large shareholders can do maths.

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The same conclusion I came to on the day the merger was announced based on above calculation, which is also why i doubled my position around $1.08. The implied valuation is absurd which is why (i believe) the scheme in it's current form will fail and SLR will re-rate closer to it's current NPV around $1.60.

Last edited by BullishBearish: 11/03/24

SLR Price at posting: $1.20 Sentiment: Buy Disclosure: Held
5 Upvote

1 Great analysis

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