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Everlast Worldwide (EVST) 2.3% shareholder Aquamarine Capital believes the buyout of the company at $26.50 is under-priced, saying the fair value of the company is in excess of $50 per share.

The firm said:

The $26.50 takeover price equates to less than 12x FY 2007 EBITDA guidance. Given management's recent history of conservative guidance, coupled with the buyer being closely associated with a current Everlast licensee, we believe that recent guidance will likely prove conservative, bringing the multiple closer to 10x if not lower.

Other fast-growing athletic and performance oriented consumer brands with lesser brand recognition, are valued at multiples which are 2x-3x greater. Assuming $15mm in EBITDA generation by 2008 (an arguably conservative estimate), a $50 share price for Everlast would equate to 18x EBITDA. Furthermore, $50/share represents a 30%-40% discount to the current value of comparables companies like Under Armor (UA, NYSE, $47.68, 31x EV/EBIDA), and would come much closer to representing fair value for current shareholders, in our view.

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