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Compass Diversified Holdings Message Board

  • johndaley404 johndaley404 Jul 10, 2013 9:05 AM Flag

    Fox IPO

    Looks like $35m of ltm ebitda and maybe $17m of ltm free cash flow. With its growth rate and the market's valuations think it could IPO for $350-$400m of enterprise value. Say $375. As CODI owns 76%, that's ~$285, or maybe $275 after fees if they sold their entire stake, which they're not going to. They probably keep another $40 million for their fee so its $235 or so of cash to CODI's shareholders, plus getting rid of the commensurate % of the supplemental put and noncontrolling interests. At the end of the day, think that our trading multiple is probably pretty much unchanged around 7.5-8x trailing EBITDA, but it basically eliminates the net debt on our balance sheet. They could either pay off the credit facility and save ~$20m annually on interest expense or buy back about 13m million shares, either way it's probably a small positive for shareholders.

    While they may only sell off 30%-40% right now, they will sell all of it eventually because owning public companies shouldn't be their business. It would also be nice if they announced the actual IPO along with a dividend raise (which they can obviously do now with the CAD coverage) to make us shareholders feel better about losing the highest growth segment.

    Sentiment: Buy

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    • Fox Factory shares surge 23% on IPO

      SAN FRANCISCO (MarketWatch) -- Shares of Fox Factory Holding Corp. FOXF +1.29% jumped on the day of their initial public offering Thursday. Shares of Fox Factory surged 23% to $18.50 in recent trading. The maker of high-performance vehicle suspension products priced just under 8.6 million shares at $15 a piece late Wednesday. Fox Factory is offering 2.9 million shares and shareholders including Compass Group Diversified Holdings LLC CODI +1.50% are offering 5.7 million. Underwriters have a 30-day option to buy an additional 1.3 million shares.

    • John: It's always good to see that someone on these boards actually has a modicum of understanding about the underlying stock. Check the recent SEC filing re entry into material agreement. I believe it eliminates the supplemental put.

      • 1 Reply to mthiker2004
      • Hi mthiker2004, apparently we were too low. 36.3m shares at $15 per share is $545m, which makes our portion about $411m. While there are obviously some fees and taxes in there, plus a higher amount for the supplemental put than we originally thought, it basically means that we're trading at 6.5x trailing EBITDA ex-FOX now if we assumed that all of Fox is liquidated. That also means a lot more cash to buy back stock, pay down debt or whatever. Hopefully, the market appreciates this.

        Sentiment: Buy

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