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 prices
Here'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% 3 2020 IHS Markit S&P 4.3 44 10% 4 2022 Xilinx AMD 3.2 49 7%
2. Potential revenue for 4DS' tech
So 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 2 50% 500 306.18 3 20% 200 122.47 4 10% 100 61.24 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!
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