IAC et al: Sorting Through Barry Diller's New Offspring

Trading began yesterday on a when-issued basis on the four IAC/Interactive (IACI) spin-off companies, as well as the new post reverse-split, post-spin shares of IAC. With relatively thin dealings, volatility in the shares is high. In a research note this morning, Lehman analyst Douglas Lehman asserts that most of the pieces are trading significantly below their fair value:

• HSN (HSNIV) today is up $1.10, or 10.1%, to $12.00. Anmuth puts the value of the company at $15.45 a share. Implied market cap at current price based on 57.2 million shares out is $677.8 million.
• Interval Leisure Group (IILGV) is down 20 cents, or 1.5%, to $13. He thinks it is worth $12.28 a share. Implied market cap based on 57.2 million shares out is $743.6 million.
• Ticketmaster (TKTMV) is down 71 cents, or 3%, to $23.00. Anmuth puts its fair value at $33.12 a share. Implied market cap based on 57.2 million shares out is $1.33 billion.
• Tree.com (TREEV) is up $1.33, or 18.2%, to $8.65; Anmuth calculates the company’s value at $24.25 a share. Implied market cap based on 9.3 million shares out is $80.4 million.
• New IAC (IACIV) is up 81 cents, or 4.45%, to $19. The analyst think it is worth $22.18. Implied market cap based on 146.4 million shares out is $2.74 billion.

Meanwhile, old IACI (IACI) is up 54 cents, or 2.9%, to $19.21.

Comments

[craigatk:]

The when-issued action is interesting. According to my calcs, the when-issued worth of 1 share of IACI today pre-split (today trades at around $18.24) is $28.88. Am I doing the math correct or missing something else that is relevant? Big buying signal if not!

1 share IACI = 1 share "new" IACI + 1/5 share TKTM + 1/5 share HSNI + 1/30 share TREE + 1/5 share IILG using your above stated when-issued prices.

2008 Aug 18 09:47 AM

[craigatk:]

Noticed the supposed mistake. 1 share of "new" IACI is really 1/2 of an old IACI due to the 1 for 2 reverse split. New calc makes 1 share of IACI using this numbers above worth $19.38. Anybody else?

2008 Aug 18 10:30 AM