European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Event-Driven

Daily Mail & General Trust / Event-Driven

The shares of DMGT suffer from a double discount because of both the conglomerate structure and the unusual governance (the founding family has a 36% economic interest but all the voting power).
This would be an opportunistic bid where the family uses the cash from the special dividend to fund their take-private deal, for the very same reason that the Daily Mail charges against American private equity plunderers of listed UK companies: price.
I estimate that the whole package would be worth 1131p-1277p, therefore a 1%-15% premium to the closing price on 14 July. Beware though of the many moving parts and lack of clarity on the tax consequences of the RMS divestment and Cazoo listing. 
The price mooted for the newspaper and the rump businesses does not look particularly generous on 0.7x EV/Fwd sales, 6x EV/Fwd EBITDA, as most of those businesses have been hard hit by the pandemic.
Considering that the Rothermeres own all the voting shares, it is highly unlikely that there will be any interloper risk. It also seems difficult that the family will abuse its power to rip off minority shareholders. I reckon that the initial figures may be sweetened.
Further upside (around 100p/share) may come from a fairer valuation of consumer publishing and the other businesses, that would take the total package to a 24% premium to 14 July closing price.

The shares of DMGT suffer from a double discount because of both the conglomerate structure and the unusual governance (the founding family has a 36% economic interest but all the voting power).
This would be an opportunistic bid where the family uses the cash from the special dividend to fund their take-private deal, for the very same reason that the Daily Mail charges against American private equity plunderers of listed UK companies: price.
I estimate that the whole package would be worth 1131p-1277p, therefore a 1%-15% premium to the closing price on 14 July. Beware though of the many moving parts and lack of clarity on the tax consequences of the RMS divestment and Cazoo listing. 
The price mooted for the newspaper and the rump businesses does not look particularly generous on 0.7x EV/Fwd sales, 6x EV/Fwd EBITDA, as most of those businesses have been hard hit by the pandemic.
Considering that the Rothermeres own all the voting shares, it is highly unlikely that there will be any interloper risk. It also seems difficult that the family will abuse its power to rip off minority shareholders. I reckon that the initial figures may be sweetened.
Further upside (around 100p/share) may come from a fairer valuation of consumer publishing and the other businesses, that would take the total package to a 24% premium to 14 July closing price.

Many Moving Parts in Rothermere's Bid to Take DMGT Private