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Could this new stock be a repeat of a recent 124% winner?

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April 30, 2015 – Comments (1) | RELATED TICKERS: PAH , DOW

 

The stock of a a special purpose acquisition corp. sponsored by Avenue Capital Group called Boulevard Acquisition Corp. $BLVD soared 21% this morning when word broke that it has purchased Dow Chemical's $DOW AgroFresh business.

The EV/EBITDA multiple of the acquisition, 8.7x, it fairly similar to $DOW's current multiple as a while and we are talking about a division that Dow clearly didn't want that resides in a chemicals sub-sector that has faced headwinds recently. This valuation becomes even less compelling when one takes into account that it was calculated using an assumed value of $10/share for $BLVD stock, which one would have to pay $12.50/share to purchase today.

Dow will own 40% of the stock in the new business.  There could eventually be selling pressure on the stock if Dow decides to monetize this position.

 

Having said that this purchase is reminiscent of the recent Bill Ackman Platform Specialty Products Corporation $PAH deal, which is +124% since its inception.  So it's definitely something to keep an eye on. 

The valuation of $BLVD seems too rich for me to personally sink real money into for now, but keep in mind that this is coming from someone who found the valuation of Platform Specialty to be too rich for their blood when they looked into it and it has more than doubled since.

Boulevard Acquisition Corp. To Acquire AgroFresh Business From The Dow Chemical Company

http://www.cnbc.com/id/102635638

Jason

1 Comments – Post Your Own

#1) On April 30, 2015 at 12:42 PM, TMFDeej (98.39) wrote:

Interestingly, while 8+x EV/EBITDA does not scream cheap to me, it is significantly cheaper than comps: 

https://twitter.com/BluegrassCap/status/593816275911979008/photo/1

 

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