This has been expected and could drive NCP to Gse target price of $12.55.
Macquarie: News Corp placement competed at a premium 13/01/04
Last night Merrill Lynch completed the much anticipated placement of General Motors $1.2bn stake in News Corporation (NCP) at a premium to the last traded price of NCP’s preference shares (NCPDP). The 114.4 million NCPDP’s were placed at a price of $10.26, relative to the closing price of $10.23 yesterday.
Market commentators speculated that management had held off completing the placement until last night to coincide with index adjustments in the S&P/ASX 300, which will see NCP’s weighting increased by 15.6%.
Macquarie Research Equities (MRE) believe that NCP shares have been adversely affected by the perceived stock overhang in recent weeks, and that the stock is trading at a significant discount to its US peers. Based on 2004 earnings forecasts, MRE have calculated NCP's earnings per share discount as 10% to Time Warner, 21% to Viacom, and 22% to Disney. MRE hold an Outperform recommendation on NCP and a base valuation of $13.32.
