Stamps.com to be Acquired by Thoma Bravo for $330.00 Per Share in Cash
Stamps.com (STMP) has agreed to be acquired by private equity firm Thoma Bravo for $330.00 per share in cash, a 67% premium to the last closing price prior to the announcement of the transaction. The purchase price represents an equity value of $6.6 billion and adjusting for an anticipated net cash outflow of $77 million related to the company’s settlement of a lawsuit, reflects TTM EV/Sales and EV/EBITDA multiples of 7.7x and 21.4x, respectively. Based on consensus estimates for FY ’21, these multiples increase slightly to 7.8x and 26.8x, respectively, and based on our higher FY ’21 estimates, represent multiples of 7.5x and 24.5x. Terms of the agreement include a 40-day “go-shop” period expiring August 18, 2021, and assuming no superior proposal emerges, the transaction is expected to close in the current calendar quarter.
In regards to the premium and transaction multiples, both are reasonable and justifiable in the context of recent software deals and STMP’s historical trading multiples. That said, we have always viewed Stamps.com as a juggernaut in the e-commerce space and believed shares could eventually garner a premium valuation more akin to highly regarded peers like Shopify. While the sale of the company eliminates any near-term uncertainty as Stamps.com navigates the aftermath of the pandemic-driven spike in e-commerce, we would have preferred to see the company remain public absent a transaction valuing the company closer to other high growth e-commerce plays. After all, Stamps.com’s international expansion is still in its nascent stages and the potential for other volume monetization deals to be struck over time remains a wildcard that we do not believe is fully reflected in the sale price. Although we remain hopeful that a superior proposal emerges, that would be an outlier with history as a guide. As such, we are reducing our price target from $340.00 to $330.00 to match the deal price. Our prior target was based on a FY ’21 EV/EBITDA multiple of 25x.
Our report with model and disclosures is available here.
Disclosure(s):
The analyst, a member of the analyst’s household, and/or an account in which the analyst exercises discretion hold(s) a long position in the common stock of Stamps.com (STMP).