Dalius - Special Sits
$CAU.L management is knocking the value-unlock thesis out of the park.
The stock is up 50% since my initial post, a much better outcome than expected. I did not anticipate a full liquidation.
The company just announced the sale of its primary asset, The Laywer, for £43m. This comes on top of the mini-MBA business sale from a few months ago. At present, the company has net cash of £24.5m, plus £43m from the sale, and remainco with £16m in sales. This has effectively turned into a full liquidation, so the corporate cost discount should be eliminated. That compares with a £60m market cap today.
At this point, I believe much of the upside has already been realized. The £43m is a gross proceeds figure subject to adjustments, with potential tax and advisory cost leakage. Given that, and considering I don’t see much value in the remaining marketing operations, the upside from here looks limited. Still, this has been a great win for anyone involved.
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$CAU.L management is knocking the value-unlock thesis out of the park.
The stock is up 50% since my initial post, a much better outcome than expected. I did not anticipate a full liquidation.
The company just announced the sale of its primary asset, The Laywer, for £43m. This comes on top of the mini-MBA business sale from a few months ago. At present, the company has net cash of £24.5m, plus £43m from the sale, and remainco with £16m in sales. This has effectively turned into a full liquidation, so the corporate cost discount should be eliminated. That compares with a £60m market cap today.
At this point, I believe much of the upside has already been realized. The £43m is a gross proceeds figure subject to adjustments, with potential tax and advisory cost leakage. Given that, and considering I don’t see much value in the remaining marketing operations, the upside from here looks limited. Still, this has been a great win for anyone involved.
$CAU.L is working out quite smoothly, with an overall 25% gain since the initial post. Additional 15%+ upside remains upon the return of capital from the announced sale.
The Mini-MBA business was sold roughly in line with my expectations at almost 2x sales. The combined value of the Mini-MBA (based on a £19m EV sale tag) and the dominant legal journal (which I value at 12x EBITDA) is around £60m in EV.
Subtracting central costs, capitalized at roughly £17m, gives us an EV after corporate costs of £43m. Adding net cash of c. £8.9m brings the equity value to around £50m, effectively leaving the rest of the marketing businesses, cyclically challenged but still generating about £16m in sales, essentially for free.
At 0.5x sales, those businesses could add another £8m in value, bringing the total to £58m (after corporate costs), or about 16% upside from current levels. The capital from the sale will be returned to shareholders, which should further catalyze the stock to those levels. tweet
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