Veda Group received a written indicative and nonbinding proposal by Equifax to acquire Veda for AUD $2.70 per share. This is by no means a done deal. Due diligence and regulatory approvals will be first hurdles, with endorsement by Veda's board of directors also important should a binding offer eventuate. Maybe Veda's board will push for a higher price, but we believe AUD $2.70 per share, a small premium to our fair value, is a good outcome for shareholders. Equifax clearly appreciate the sustainable competitive advantages of Veda's credit bureau business, with propriety data the key source of our wide economic moat rating on Veda.
Moelis:
BUY with a $2.90/share Price Target. Our target price takes into account strategic bidders ability to pay, the unique value of Veda's dominant market position in ANZ, plus the option of higher credit volumes should comprehensive credit reporting take hold. Our $2.90/share price target represents a 30% premium to Veda's six month VWAP.
Higher Bid Possible. Our analysis suggests that a higher offer is possible. The unique strategic value of Veda's credit & data assets in a developed economy are attractive. We also see possible tailwinds in the medium term from the move to comprehensive credit reporting which may see higher volumes of credit data in ANZ.
VED Price at posting:
$2.68 Sentiment: Hold Disclosure: Held
