Midday has sold its print business to Jagran Prakashan. The pay off is in form of Shares of Jagran prakshan. The Ratio of Shares to be issued is 2 shares of Jagran for every 7 Shares of Mid - Day. Along with that the share holder will own shares of Mid -day which will have is Radio business & License.
There is an opportunity to be made in this deal. The shares holders of Miday will get 2 shares of Jagran for every 7 shares along with shareholding in midday. The residual value of Midday after demerger of it Print business should be between 8 - 10 Rs. It is worthy to buy midday at this price for a better gain.
The valuation of the deal is as follows
CMP of Mid day 30.35 cost of 7sh = 212.45
CMP of Jagran 111.40 cost of 2sh = 222.80
Net pay off -10.80
Residual value of Midday 8.00 Price of 7sh = -56.00
Total Pay off -66.80
It means if we buy Mid day today , the net payoff is Rs 66.80 if we value residual share of Miday at Rs 8/-.
If you are bullish on jagran buy Mid-day. Also there is a natural hedge in case of fall in price of Jagran.
The Caveats to this opportunity are
a) The Deal may take up to 6 months to conclude because of getting different approvals from government agencies.
b) There is a risk that price of Jagran will fall, as well as opportunity that it will go up.
c) Radio business of Midday is loss making and it requires huge capex.
No comments:
Post a Comment