Exeed looks to have similar EBITDA margins to DDR (~4-5%), but...

Exeed looks to have similar EBITDA margins to DDR (~4-5%), but as @ShortSqueeze pointed out, DDR's EV/EBITDA multiple is in the high teens compared to the price they are paying for Exeed

The only challenge will be how to pay for this.....they literally pay out every cent of PBT as a dividend so either they maintain a higher debt level (from memory they had ~60m in capacity on their westpac facility), or do a capital raise. I'd rather the latter given how challenging it must be to manage their working capital given how rapidly they turnover inventory......must be even trickier in covid given lockdowns, shutdowns, and potential vendor cashflow issues on their receivables.

If they do a capital raise, using ShortSqueeze's numbers, raising 70m (for 15m of EBITDA) and we assume DDR's price adjusts to that higher EBITDA, DDR's market cap should go up by ~295m (19.5*15).

They also haven't discussed synergies (cost savings, cross selling and then leveraging that massive warehouse in Sydney).....this should all allow margin expansion and continued growth to the bottom line.