Ann: UCW: Investor Presentation - Takeover Offer for RedHill, page-11

I don't disagree with your post on a stand-alone basis. If I'm valuing them (or other listed education companies) on a stand-alone basis, I'd adjust for some level of "working capital" cash.

To compare the relative value of RDH and UCW, I felt it sensible to do something about the different levels of cash on their balance sheet. This is especially the case when the "Combined Group pro forma net cash: $26.0m" (page 6 of the presentation) is disproportionately coming from RDH. In June/July 2020, RDH conducted a capital raise adding just shy of $10m.

Separately, and to RDH's disadvantage on EBITDA multiples, RDH invests and expenses their capital investments - both maintenance and growth. This understates RDH's EBITDA, which is why the EBITDA margin looks weak compared to UCW.

By switching off RDH's capital investments (and curtailing organic growth) and removing a few common overheads, there should be good synergies to be had.

But the deal looks awful for RDH shareholders. Looks to be raid on RDH's cash at the offer price.

Most RDH investors would be underwater at the offer price with the main exception being those that invested in the discounted capital raise in June/July 2020.