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GameStop Corp. Message Board

  • razor_05 razor_05 Feb 7, 2014 12:39 PM Flag

    GME LBO Math

    Assuming a $50 per share take-out gets a pro forma valuation of about $5.1 bn netting cash. $900 million of EBITDA levered 2.5x at 6% = $2.25 bn of debt and annual interest expense of about $135 mm. That leaves about $2.85 bn of Pro forma equity behind the debt receiving annual free cash flow of about $400 million for 14% FCF yield to the equity. This business has been stable for years, even in a world of high speed internet connections. If it remains so (and it should given we are at the start of a long console cycle), that's a nice potential return for a private equity firm.

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