the Nz distribution business which was closed probably was...

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Just_a_guy

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21/02/22

13:26

Post #: 59706285
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Originally posted by dc3: ↑

Certainly fits in with David Dicker's strategy of buying underpriced assets with high potential for synergies. Given no EBITDA or profit figures are quoted, a basic revenue multiple appears quite positive at first glance

DDR trading on a trailing revenue multiple of approx. 1.25 (likely to be lower based on higher FY22 full year revenues but I won't hazard a guess at forecasting forward sales at this point). The Hills business has been bought on a multiple of approx. 0.16. If the market were to value Hills revenues on the same multiple, their business division would be worth $154m (rather than the $20m it was bought for), so roughly $134m accretive on a very rough calculation (albeit with a couple of optimistic assumptions). This is without accounting for synergies.

This is obviously optimistically contingent on the market valuing Hills revenues at the same price as DDR's broader business (i.e. assuming that their business can be well integrated to achieve limited customer run off, equivalent margins to DDR's other business units and healthy growth rates going forward). But I suspect that even with a risk factor priced in for the above assumptions, there is enough of a buffer for this to be well and truly a value accretive transaction, especially with DDR's history of successful acquisitions.

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the Nz distribution business which was closed probably was ebitda breakeven I suspect.

so the remaining distribution business being sold probably has ebitda of around 6-7mil I would suspect. I suspect the margin on these products is slightly higher than ddr’s current sales.

DDR Price at posting: $14.66 Sentiment: Hold Disclosure: Held
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