EUR 850.00 For Business Accounts Only

Morningstar | Trade Me FVE Increased to NZD 6.45 on High Likelihood of Apax Partners Offer Approval

We have increased our fair value estimate for narrow-moat-rated Trade Me to the Apax Partners' offer price of NZD 6.45, implying we expect the offer to succeed. The offer has been recommended by Trade Me’s board, rival bidder Hellman & Friedman does not intend to increase its NZD 6.45 per share offer, and no other offers have emerged. Trade Me’s agreement with Apax Partners also restricts the company from soliciting and providing due diligence access to other offers which further reduces the likelihood of alternative bids. We expect CEO John Macdonald’s long planned resignation also increases the chances of the transaction proceeding. Although our stand-alone fair value estimate remains at NZD 5.00, it’s now more likely that shareholders will realise the offer price than the intrinsic value. Our earnings forecasts are unchanged and we expect an EPS CAGR of 7% over the next decade, with the offer price implying a fiscal 2019 P/E ratio of 24. Although Apax Partners' offer looks attractive, we will provide our formal recommendation following the release of the independent advisor report in March 2019 and before the scheme meeting in April 2019.