ValueClick Projected Buyout Value

Renewed optimism surrounds shares of ValueClick (VCLK) in the aftermath of Microsoft's (MSFT) buyout of aQuantive. Speculation and debate exists in the buyout value of VCLK for good reason. With aQuantive and DoubleClick being purchased for high premiums, ValueClick seems like the next logical target . Potential suitors include Yahoo (YHOO), Time Warner AOL Unit (TWX), News Corp (NWS) and even Microsoft. When attempting to predict buyout value of a company it is important to look at recent M&A precedents. Investors should use multiples from other buyouts to develop a multiple range. This method of buyout valuation is exemplified in the chart below.

The valuation figures for ValueClick in the chart above are based on the buyout prices of the companies listed using multiples and EBITDA. Chartsetups.com estimates and Jim Cramer's estimates are also shown above. In any case the premium in a buyout situation could amount to 60-90%. Even if ValueClick isn't bought out bright times are ahead. Internet advertising capital will continue growing in coming years and ValueClick will get a nice sized slice of the advertising revenue pie. Overall, ValueClick represents a great risk/reward setup with 90% upside and 15% downside. On the graph below, favorable entry and estimated downside risk zones are depicted.

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