Jim, Just read the article link you posted. I think the article is misleading, here's why:
To achieve that share price, Switchboard would have to gain 650% on its first day, which
would make it the best-performing IPO in history. We like the stock and the current
market for IPOs is still overheated, but we think a more realistic situation is that the
offering prices around $14, which as the top end of the price range, and the stock sees a
300% gain in its first few days of trading.
Banyan's share would then be worth $549 million. Based on an industry-low multiple on
its projected revenue streams the company?s remaining network services business,
which is the core of its operations, is then worth $265 million.
That alone equals $33.54 per share, which is more than Banyan's current share price.
Backing out $46.5 million in cash and $83 million for its holdings in Software.com
(NASDAQ: SWCM - Quotes, News, Boards), Banyan is still undervalued.
Using back of the napkin math, if SWBD trades at $42 and has 5.5 million shares, it's market cap is $231 mil.
BNYN will own approx 43% (from memory so please correct me if I'm wrong) of the 231 mil or about 100 mil.
If BNYN were to liquidate its interest in SWBD, they would pay tax on their gain. Therefore the 100mil needs to be discounted by at least 40%. So at $42, swbd only adds about 60mil to bnyn marketcap.
BNYN has 22.5 million shares outstanding, so 60mil only adds about $2.67 per share to BNYN. Add another $5 for cash on hand, $2 for their stake in software.com and maybe $15 for BNYN core biz and I come out with about $24.
I think SWBD will have a hard time getting and staying at $42 (but not impossible) and BNYN core could be worth as little as $10 or even $8.
So on the low side, BNYN *could* trade as low as $17.
Good luck. |
