Cantor Fitzgerald Reaffirms Hold On Conversant Following Acquisition By Alliance Data


In a research note issued today, Cantor Fitzgerald analyst Youssef Squali reaffirmed a Hold rating on Conversant (NASDAQ:CNVR) with a $24 price target, following the news that Alliance Data Systems (NYSE:ADS) would purchase Conversant for $2.3B, or $35/share, implying a 34% premium to the 30-day average closing price of Conversant stock.

Squali wrote, “We believe that this transaction will be approved by Conversant shareholders and we do not expect there to be a competitive bid. CNVR had a ~27% short position as of 8/15/2014.” The analyst continued, “The definitive agreement is structured such that Alliance Data will acquire all outstanding shares of Conversant for ~$2.3B using ~48% cash and ~52% ADS shares, with a 10% symmetrical collar. That said, Conversant shareholders can opt to receive the consideration in 1) all cash, 2) all stock, or 3) the aggregate mix of consideration.”

Squali added, “The acquisition is expected to provide Alliance Data with enhanced online, anonymous and unstructured data, cross-device and cross-channel technology through Conversant’s Common ID initiative, as well as scale in rapidly growing display, mobile, video, and social digital channels. The deal is expected to be accretive to ADS to the tune of $0.50 and 0.75/share to core EPS in years 1 and 2, respectively.” 

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 34.2% and 80.9% success rate. Squali has a 54.6% average return when recommending CNVR, and is ranked #2 out of 3295 analysts.

 

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