On May 9, it was disclosed that the OGGTA purchased the bundle for $158-million, which is less than one times the annualized earnings before interest, taxes, depreciation and amortization (EBITDA) of the bundle, based on first-quarter results. That’s an acquisition multiple much lower than many expected. Reminiscent of the privatization of Highway 407, the sale involves a massive transfer of wealth from the Government of Ontario, and ultimately all Ontarians, to the private sector. This is yet another example of the government’s inability to receive maximum value for its assets, limiting its capacity to service its soaring debt and pay for essential social services.
The bundle should have been sold at a multiple far in excess of one times EBITDA. In North America, casino and gaming assets trade publicly for an enterprise value of eight to 13 times EBITDA. Within two days of Great Canadian’s financial disclosures of the deal’s terms its stock price jumped by 36 per cent, adding some $840-million of market value to the company, which one could argue implicitly values the acquired bundle at $1.7-billion, or an enterprise value of eight times EBITDA. Since the OLG only received $158-million for the bundle, it suggests that the government has left as much as a staggering $1.5-billion on the table.
No comments:
Post a Comment