What The $2.2 Billion BYD Deal Means For Jabil Shareholders

Summary

• JBL is selling its Mobility China business to BYD for $2.2 billion.
• That equates to an estimated 16% of Jabil's entire market cap and an estimated ~15% of Jabil's entire enterprise value.
• Even if the company decides to allocate only 50% of the proceeds to buybacks, it will more than double the existing authorization to an estimated $1.9 billion.
• All that said, Jabil continues to trade at a significant discount to the S&P 500, even as the company will continue to grow EPS and free cash flow per share faster than revenue.
• I reiterate my BUY recommendation on Jabil and have a $125 price target by year-end.

Jabil's Silicon Valley Manufacturing Facility.

Sundry Photography

On Sunday, August 27, Jabil (NYSE:JBL) announced it was selling its Mobility business in China to BYD Company (OTCPK:BYDDY) (OTCPK:BYDDF) for $2.2 billion. The stock responded very positively to the deal, and at pixel time is currently

Analyst’s Disclosure:I/we have a beneficial long position in the shares of JBL, VOO, QQQ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am an electronics engineer, not a CFA. The information and data presented in this article were obtained from company documents and/or sources believed to be reliable, but have not been independently verified. Therefore, the author cannot guarantee their accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for the investment decisions you make.