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11/03/24
10:33
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Originally posted by TazD:
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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.