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Technology Stocks : Preview Travel (PTVL) ---- Via...Excite & AOL
PTVL 1.3900.0%Jan 21 4:00 PM EST
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To: Kal Perry who wrote (715)10/20/1999 11:12:00 AM
From: Wolff  Read Replies (1) of 728
 
I saw another article that said PTVL was the best way to participate in the Travelocity, and that PTVL got a great deal in the Merger, (forgot where and not going to look it up)

But it makes sense the 1 for 1 stock conversion is great. I don't like a tony of Internets but this is a good one IMO, solid business and reasonable stock values and mergering to be the Giant sector leader.............wolff

In a perfect world--------->

$200 price target and rational.

Here is how I arrived at my $200 target price.

To recap the story, Sabre's Travelocity division is merging with Preview Travel (PTVL) to form a new company travelocity.com (TVLY). Sabre is also throwing in $50 million cash, and will be owning 70% of TVLY, while PTVL owns the other 30%. Also PTVL shares will be converted 1:1 to TVLY.

Currently PTVL has 13.8 million outstanding shares. So TVLY will have 46 million (13.8 / 0.3) outstanding shares, out of which 32.2 million will be held by Sabre (on paper anyway).

Now look at market capitalization. TVLY will be the No.3 largest e-commerce site, behind AMZN (26 billion market cap) and EBAY (18B). A simple extrapolation will get you 10B for TVLY.

Looking it from another angle. Priceline.com (PCLN) is the No.3 online travel site behind the current Travelocity (the merged TVLY will be even bigger) and Microsoft's Expedia, yet the market values it at 9.3B. So 10B is really a pretty conservative market cap for TVLY.

Now divide the market cap by outstanding shares, you get the share price:

$10000 million / 46 million = $217

Of course, you'll have to wait till first quarter 2000 when the deal is complete to expect that price. Now PTVL is traded at 26-27 range. A 3-4 month wait for an 8 fold increase is well worth it, wouldn't you say? :)

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