Bill if you haven't yet take a look at it his deal not bad at all.
LARGE CAP
USD 28.81
Peregrine Systems, Inc. (PRGN)
Acquires Remedy for $1bn
Summary
· This morning, Peregrine Systems announced that will acquire RMDY
for $1.08 Bn,
or apprx. 3x CY01 total revenue. Deal expected to close in August.
· RMDY was next largest competitor in IT held desk and IT asset
management side,
though primary customer strength was for small to mid-size
customers. RMDY had
apprx 11% mkt share and 10,000 customers (Walmart, Citigroup,
Cargill). Combined
with PRGN's high-end focus and mkt share of 25%, the combined
company will have
a 36% mkt share.
· Deal structure: $270 mm in cash and 28 mm shares of PRGN. To
close late
Aug/early September. Both PRGN and RMDY had $200mm+ in cash;
combined co will
have "in excess of $150 mm" left. Will be accretive 8% or $0.06 for 4
qtrs
after deal closing; similar revenue impact (8%), but final # will be given
after
closing. Our FY02 est prior acq are $800M and $0.68. Post acq we
expect apprx
$950-$1bn and $0.71.
· Synergies mentioned: SME customer extension for PRGN. RMDY's
ActionRequestSystem for rapid development environment by
customers who want
extensive customization. This was a development environment, not an
out of the
box application. RMDY's ASP was $50-100K, or 1/3 the price of
PRGN's high-end
solution.
· This is a large deal for PRGN, which is acquiring a weaker competitor
that had
struggled but was putting together a salesforce-driven comeback.
Financially,
deal appears positive due to eps accretion, incremental revenues, and
slightly
better operating margin. Maintain Buy and $35 DCF based price target.
Price Target Mkt. Value 52-Week
6/08/011 (12 Months) Dividend Yield (Millions) Price Range
USD 28.81 $35 - - $4,580.8 $38-13
Annual Prev. Abs. Rel. EV/ EBITDA/
EPS EPS P/E P/E EBITDA Share
3/02E $0.68 - -
3/01E 0.53
3/00A 0.32
June September December March FY End
2002E $0.12 $0.13 $0.21 $0.22 Mar. 31
2001E $0.10 $0.12 $0.15 $0.16A
2000A 0.07 0.08 0.08 0.09
Total Debt (3/01) $267 mil.
Book Value/Share (3/01) $8.75
Debt/Total Capital (3/01) 16.1%
Common Shares 159 mil.
Est. 5-Yr EPS Growth 45%
Est. 5-Yr. Div. Growth -
1On 6/08/01 DJIA closed at 10977.00 and S&P 500 at 1264.96.
San Diego, California-based Peregrine Systems is a leader in e-Business
applications and services for infrastructure asset management,
employee
self-service, complex goods e-procurement and B2B e-commerce
enablement (data
transformation/integration, catalog management, and marketplace
infrastructure
management).
N.B.: CREDIT SUISSE FIRST BOSTON CORPORATION may have, within
the last three
years, served as a manager or co-manager of a public offering of
securities for
or makes a primary market in issues of any or all of the companies
mentioned. |
