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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector
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To: rich evans who wrote (2108)7/19/1999 9:25:00 AM
From: Steven Dopp   of 2542
 
Has anyone taken a look at the Benchmark (BHE) acquisition? I'm trying to get a handle on it for my stock club. My rough guesses are that the number of outstanding shares has risen from 11.5 million to 16.5 million as a result of their issuance of new stock plus the 1 million shares they gave out as part of the acquisition. As I see it, BHE added a net $125 million in debt to acquire Avex. Assuming all $255 million of the purchase price is put on the asset side of the balance sheet, and given a price of around $42 per share, I come up with a p/e ratio of around 40 with a debt/equity ratio of around .50.

Assuming Avex's 861 million in annual sales yields a 4 percent profit margin, we are talking about $34.5 million in annual earnings, which should be enough, I think, to meet the debt payment on the additional $125 million in debt BHE assumed to buy Avex.

These numbers (hah, guesstimates) suggest to me that BHE made a reasonable acquisition. I don't know what the acquisition does to their product mix. I am recommending that my stock club continue to hold the stock but not to buy more shares at this time. What do the other members of this thread think? Have I made reasonable assumptions?
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