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Ancestry.com Inc. Message Board

  • swank818 swank818 Dec 18, 2012 8:06 AM Flag

    If Deal is held up stock will drop to around $27-$28

    That was the price range before the deal was finally announced. If you carefully read the filings related to the deal you will see that while the bidding started out in the $35-$37 range, all of the other bidders went by the wayside after they did their due diligence; certainly not a good sign. I doubt if the buyout group can sweeten their offer since they are already, seemingly, flat out to finance the deal the way it is. Also, the company just took on $300million of very expensive debt which will cost it about $32 million/year to service, which would be a huge drag if the deal craters and they are forced to remain a public company.

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    • The debt is not a drag if this deal goes sour, it can simply be repaid or used for general corporate purposes.....stock buy back at the current price. This would repurchase 9m shares or about 20% of the outstanding and be an enhancement to the eps. Also the company pays taxes so the interest expense is tax deductible and the after tax cost will be largely offset by the increase in eps and ultimate equity value. Don't forget private equity today models deals based on a 20% irr which basically doubles equity value every 4 years....why would this be different if the company stayed public? In the short term the price may go down but the real value is there and will be realized....

      Sentiment: Hold

    • Looks like the market is thinking the deal is done!
      Best to sell shares now at 31.99 than waiting for that extra 1 cent

 

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