NWS continues its strategy of small deals in their core divisions. This deals looks like a good complement for their Dow Jones division. Interesting attributes : growing (+ 10 % per year since 2016), high margin (adjusted Ebitda margin of 50 %+), subscription based and modest Capex requirements.
Based on their estimates for FY 11/21, it corresponds to a price of 17.7 x EBITDA or 14.9 x EBITDA if we include the expected tax benefits from the transaction. If EBITDA is a good proxy for free cash flow, it corresponds to a free cash flow yield of 5.6 %. It looks to me as an interesting price for a stable business (thanks to subscription) which is growing at 10 % per year.
NWS Price at posting:
$32.16 Sentiment: Buy Disclosure: Held
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