Partial Spinoffs Question

[A Humble Man]

Dear value investors,

 

I am currently attempting to value Angi. IAC owns about 90% of the company. If Angi's market cap is $800M, does it mean that the whole company is being priced at $800M or just the spun off portion? By doing back of the envelope valuation, it could be either 2x from or 20x. Big-big gap here. 

 

Thank you very much for your help!

 

[gfp]

Always get your share counts and market capitalization figures from the SEC's website.  The share count is 506 million.  At 1.62/share the entire company's market cap is $820m.

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1705110/000170511023000068/angi-20230630.htm

[A Humble Man]

21 minutes ago, gfp said:

Always get your share counts and market capitalization figures from the SEC's website.  The share count is 506 million.  At 1.62/share the entire company's market cap is $820m.

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1705110/000170511023000068/angi-20230630.htm

So, that means that no matter how much the holding company holds (IAC), the float is the "whole pie" of Angi, and the mkt price is the price for the whole company, including the shares that haven't been released to public yet. right? 

 

Thank you!

Edited October 27, 2023 by A Humble Man

[gfp]

At this time, the total share count is 506 million plus the potential for 28 million more shares granted as RSUs or underwater options to management.  The 28m potentially dilutive shares are not currently included in the share count because they would be "anti-dilutive."  As with every company, the company can always dilute you in the future by issuing more shares.

 

Be careful with investing in individual equities until you get a handle on share counts and market values.

[A Humble Man]

Just now, gfp said:

At this time, the total share count is 506 million plus the potential for 28 million more shares granted as RSUs or underwater options to management.  The 28m potentially dilutive shares are not currently included in the share count because they would be "anti-dilutive."  As with every company, the company can always dilute you in the future by issuing more shares.

 

Be careful with investing in individual equities until you get a handle on share counts and market values.

Thank you very much for explaining it to me! I apreciate it!

[Saluki]

If you are looking at the parent instead of the partial spinco, keep in mind that that even if in a sum of the parts analysis, the parent seems cheap, there may not be a way to unlock that value. 

 

Prosus/Naspers for years traded at a value that was less than it's holdings in Tencent, but you can't buy one and short the other, because if they don't sell the position, the discount may not close.  Ditto with Bausch Health which spun off 10% of Bausch and Lomb and kept the other 90% for themselves.  That Bausch and Lomb position made BHC look like a bargain, but they were not able to spin it off or sell it because of their debt covenants and liability from lawsuits. Yahoo also eventually found a way to distribute it's BABA shares, and people made some money, but it wasn't the tax free home run that people anticipated.