ADS - Alliance Data Systems

[vince]

Buyback with epsilon (ex-$1.9b debt repayment as guided) And then debt repayment with loyalty one.  They'll need to do something  about Corp debt if they sell loyalty one..  I basically eliminate it with sale proceeds + cash flows.

How much EPS are you able to get? I feel like I am being generous on growth and credit and still don't see how it gets meaningfully higher.  Doubt the stock works if GAAP EPS can't get close to $30.

Haven't really done it in a while but your 25 was in my range if I remember correctly.  I always had the problem of figuring out how much debt they would retire.  But I do my valuation a little differently.  For instance, lets assume that Ads will be trading at 8 times earnings after both dispositions and assuming they have conservative corporate debt.  So you are starting at a 12 percent yield.  Now you have to estimate what their earnings growth rate will be and how much of the earnings they will need to get that growth rate.  Lets assume that they will grow earnings at a 10% clip and use 25% of their earnings to get that growth.  So you will be left with a 9 percent yield on cost (12-3) and a 10% growth rate.  Even with no multiple expansion you will end up with close to a 20% annual return.  I don't have to guess what future multiple the market is going to put on the business cause i'm not paying 20-25 times.  There is an extremely good chance that the multiple will not fall below 8 for any extended period if they are growing with good returns on incremental capital .  And if that's correct, you only need 5-6 percent growth to realize a mid teens return.

[kab60]

Clock is ticking... Who thinks Ed promised a bit too much once again?

"Sure. I would say, now that we've moved officially into the process itself and NDAs are going out the door, based on the inbounds that we've seen over the last 8 to 12 months, there's a lot of interest that's out there, certainly, from the PE world as well as from the strategic side. So based on what I'm hearing, seeing and what our advisers are saying, this thing ought to move pretty quickly. There's not a lot of hair on this thing, so there's not a lot of intercompany relationships we've got to worry about and everything else, and the whole thing is going to be taken care off all at once. So I think that's going to happen pretty quickly. I mean, I'd be surprised if there's no announcement in Q1." (tue 4th of december 18)

[mwtorock]

Clock is ticking... Who thinks Ed promised a bit too much once again?

"Sure. I would say, now that we've moved officially into the process itself and NDAs are going out the door, based on the inbounds that we've seen over the last 8 to 12 months, there's a lot of interest that's out there, certainly, from the PE world as well as from the strategic side. So based on what I'm hearing, seeing and what our advisers are saying, this thing ought to move pretty quickly. There's not a lot of hair on this thing, so there's not a lot of intercompany relationships we've got to worry about and everything else, and the whole thing is going to be taken care off all at once. So I think that's going to happen pretty quickly. I mean, I'd be surprised if there's no announcement in Q1." (tue 4th of december 18)

i just hope he over promised on the timeline but not the price.

[LowIQinvestor]

I'm confident we hear something soon about sale of Epsilon & the price is fair. Hoping for a large strategic buyer.

CEO will have too much egg on face if not. Given his comments highlighted below:

"Sure. I would say, now that we've moved officially into the process itself and NDAs are going out the door, based on the inbounds that we've seen over the last 8 to 12 months, there's a lot of interest that's out there, certainly, from the PE world as well as from the strategic side. So based on what I'm hearing, seeing and what our advisers are saying, this thing ought to move pretty quickly. There's not a lot of hair on this thing, so there's not a lot of intercompany relationships we've got to worry about and everything else, and the whole thing is going to be taken care off all at once. So I think that's going to happen pretty quickly. I mean, I'd be surprised if there's no announcement in Q1." (tue 4th of december 18)

[kab60]

I was mostly joking. I think it'll be fine but it does show he's too promo and optimistic. PE sit on a ton of dry powder, rate expectations have come down (cheap leverage), equity markets are fine (so strategics can justify a higher price), and if strategics are interested there should be sound competition. But it would be nice if it came sooner rather than late if the environment changes for the worse.

[LowIQinvestor]

Also,

On Feb 7th 2019:

CEO Ed Heffernan: "Initial bids have been received and we are currently finishing selection of final bidders"

[LowIQinvestor]

I'm not options expert
but there were some weird CALL buying yesterday in ADS.

[abitofvalue]

So tomm is D-Day or will Ed be surprised by no announcement in Q1.

[LowIQinvestor]

Buckle Up!

[LowIQinvestor]

ADS just spiked higher on heavy volume
What is the news?