I put a little thought into takeover prices the other day. Bear in mind I'm an amateur, but here it is:
1. Comparable takeover pricesHere's a table of some comparable takeover prices, including the ratio of revenue (prior to takeover) to takeover price.
| year | takeover | by | revenue (bill) | acquisition price (bill) | rev to price |
|---|
| 1 | 2021 | activision blizzard | microsoft | 8.8 | 86.2 | 10% |
|---|
| 2 | 2022 | vmware | broadcom | 12.9 | 61 | 21% |
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| 3 | 2020 | IHS Markit | S&P | 4.3 | 44 | 10% |
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| 4 | 2022 | Xilinx | AMD | 3.2 | 49 | 7% |
|---|
2. Potential revenue for 4DS' techSo the only thing I could think to compare 4DS to to understand the potential addressable market was DRAM. The global addressable DRAM market was $97 billion in 2022 and projected to reach $126 billion in 2031.
So, just to make the maths easier, and because these are the only numbers I have to go on, let's assume:
- Addressable market = $100 billion (based on DRAM)
- Revenue to Takeover Price ratio = 10% (based on table above)
This gives us the following takeover prices based on % of DRAM's market - or, if you like, a % risk reduction:
| DRAM market | Acqu. Price ($bil) | price per share |
|---|
| 1 | 100% | 1000 | 612.37 |
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| 2 | 50% | 500 | 306.18 |
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| 3 | 20% | 200 | 122.47 |
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| 4 | 10% | 100 | 61.24 |
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| 5 | 5% | 50 | 30.62 |
|---|
As you can see, if we priced a takeover on the assumption it would achieve revenue of
just 5% of DRAM's current market, a reasonable takeover price would be $50 billion, or ~$31 per share (USD).
So - if it does what they say it does, it's worth a lot. Every time I look at these numbers I think I must be wrong - so please - pick them apart!
(20min delay)