Investors are piling into Score Media on news that the company is looking at selling its 24-hour sports information channel, but given the history and the company structure, a little caution might be in order.
Score stock is up more than 10 per cent Thursday, on about 10 times its normal trading volume, after The Globe and Mail broke the sale story. That gives the company a market capitalization of about $77-million.
So what are the odds of a big win for investors?
Bankers at CanaccordGenuity are shopping the company. That said, as the company's chief executive officer noted in the story, the company has pretty much been for sale ever since it was launched, at the right price.
At the moment that price is as high as $200-million, according to people familiar with the situation.
That's is almost three times the company's market capitalization before news of the sale leaked. That asking price translates, as the story notes, to 26 times earnings before interest, taxes, depreciation and amortization.
That's a premium valuation for a company with revenue that grew 8 per cent in the first nine months of the year compared to the first three quarters of the last year, and Ebitda that's actually down over that time.
There is said to be interest, but at a price point well under $200-million. While even a sale price of $150-million would be a double for investors who get in here, the company has a history of sticking to its price.
Given the bid-ask spread, the company's history of being shopped and the lacklustre earnings, the odds of a deal here feel long.