Private Equity Swoops-In To Buy DynCorp (DCP) 'On the Cheap'; Deal Highlights Value of Peers
Today government service provider DynCorp International (NYSE: DCP) agreed to be acquired by private equity firm Cerberus Capital for $17.55 per share, or a 49% percent premium to Friday's close.
The deal comes at a multiple of 12.4x the FY10 consensus of $1.41 and 11x the FY11 consensus of $1.59. The company is currently operating in the fourth quarter of FY10.
Competitors of DynCorp that trade publicly in the U.S. and their valuation multiple:
So looking at the numbers above, this was a case were DynCorp was trading significantly below the peer multiple. Before the takeout, DynCorp was trading at 8x FY10 and 7x FY10.
While all of the peers already trade above the deal multiple of 11x FY11, it could highlight that private equity sees 'extreme' value at these levels and any stock at or near this level could be a "buy."
So based on this view, SAIC, Inc. (NYSE: SAI), ITT Corporation (NYSE: ITT), KBR (NYSE: KBR), Lockheed Martin (NYSE: LMT) and L-3 Holdings (NYSE: LLL) all look compelling as they all trade near the private equity 'must takeover' multiple of 11x.
Market Moving News and Intelligence -
2 Weeks Free
http://www.streetinsider.com/premium_content.php
The deal comes at a multiple of 12.4x the FY10 consensus of $1.41 and 11x the FY11 consensus of $1.59. The company is currently operating in the fourth quarter of FY10.
Competitors of DynCorp that trade publicly in the U.S. and their valuation multiple:
- SAIC, Inc. (NYSE: SAI) 12.8x (FY11)
- ITT Corporation (NYSE: ITT) 13.5X (FY10)
- KBR (NYSE: KBR) 13.8x (FY10)
- Fluor (NYSE: FLR) 17x (FY10)
- Lockheed Martin (NYSE: LMT) 11X (FY10)
- L-3 Holdings (NYSE: LLL) 11.5X (FY10)
- United Technologies (NYSE: UTX) 16X (FY10)
So looking at the numbers above, this was a case were DynCorp was trading significantly below the peer multiple. Before the takeout, DynCorp was trading at 8x FY10 and 7x FY10.
While all of the peers already trade above the deal multiple of 11x FY11, it could highlight that private equity sees 'extreme' value at these levels and any stock at or near this level could be a "buy."
So based on this view, SAIC, Inc. (NYSE: SAI), ITT Corporation (NYSE: ITT), KBR (NYSE: KBR), Lockheed Martin (NYSE: LMT) and L-3 Holdings (NYSE: LLL) all look compelling as they all trade near the private equity 'must takeover' multiple of 11x.
Market Moving News and Intelligence -
2 Weeks Free
http://www.streetinsider.com/premium_content.php
You May Also Be Interested In
- If Facebook (FB) Follows This Past IPO, It Could Be Only Upside from Here...
- Sharks Circle Facebook (FB) As Shares Now Free to Short
- Siliconware Precision (SPIL) Shares Drop on Volatility Spike
Create E-mail Alert Related Categories
Insiders' Blog, Rumors, Trader TalkRelated Entities
Cerberus CapitalSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
