05-13-2019, 11:27 AM
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#1
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Norm!
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Westjet sold
Interesting day as Onex buys up Westjet
https://www.ctvnews.ca/business/onex...source=twitter
Quote:
Onex Corp. has signed a friendly deal to buy WestJet Airlines Ltd. in an all-cash transaction it valued at $5 billion, including assumed debt.
Under the agreement announced Monday, Onex will pay $31 per share for WestJet, which will operate as a privately held company.
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__________________
My name is Ozymandias, King of Kings;
Look on my Works, ye Mighty, and despair!
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05-13-2019, 11:30 AM
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#2
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Franchise Player
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Those shortsellers on Westjet after the Boeing Max fiasco are screwed! up 60% from Friday.
__________________
Peter12 "I'm no Trump fan but he is smarter than most if not everyone in this thread. ”
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05-13-2019, 11:31 AM
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#3
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Franchise Player
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Incoming increase to fares and job losses.
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05-13-2019, 12:34 PM
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#5
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First Line Centre
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Quote:
Originally Posted by Hes
Does 5 B seem cheap to anyone else ??
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I simply have no idea what i'm talking about, but yes it seemed low when I heard it. I wonder how Onex assuming $5B of WestJet's debt factored into that valuation
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05-13-2019, 12:36 PM
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#6
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Celebrated Square Root Day
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Where is Onex based? Is there a chance they pull headquarters from Calgary?
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05-13-2019, 12:38 PM
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#7
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Franchise Player
Join Date: Mar 2007
Location: Income Tax Central
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Quote:
Originally Posted by Hes
Does 5 B seem cheap to anyone else ??
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Its interesting that mention that because I was beginning to think the exact same thing.
It seems kind of low for a fairly major airline, were there significant liabilities involved in the sale that drove the price down?
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05-13-2019, 12:42 PM
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#8
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Franchise Player
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Quote:
Originally Posted by Locke
Its interesting that mention that because I was beginning to think the exact same thing.
It seems kind of low for a fairly major airline, were there significant liabilities involved in the sale that drove the price down?
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I heard on the report that it would include all WestJets's debt and liabilities. Maybe a large chunk of the planes have not been paid off.
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05-13-2019, 12:42 PM
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#9
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Franchise Player
Join Date: Mar 2015
Location: Pickle Jar Lake
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Quote:
Originally Posted by jayswin
Where is Onex based? Is there a chance they pull headquarters from Calgary?
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Toronto. They said they wouldn't be moving headquarters. But who knows, Toronto is where more of their flights are based out of now, but Calgary would probably be cheaper still.
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05-13-2019, 12:44 PM
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#10
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Franchise Player
Join Date: Mar 2015
Location: Pickle Jar Lake
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I have no idea how to value a company, but did'nt Dragon's Den say 10x earnings or something?
https://www.westjet.com/assets/wj-we...ual-Report.pdf
Averaging roughly $400 million a year, so $5 billion kinda makes sense?
Massive armchair financier here.
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05-13-2019, 12:45 PM
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#11
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Franchise Player
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i was wondering if some of the uncertainty around carbon pricing may have had a detrimental effect on the whole deal. i have read suggestions that airline tickets may increase by $100 or more over the next few years
onex seemingly has offices in TO, London NY & New Jersey. From what i have read they are going to operate WJ as is, so hopefully no changes here in calgary
__________________
If I do not come back avenge my death
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05-13-2019, 01:35 PM
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#12
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Franchise Player
Join Date: Aug 2012
Location: Seattle, WA/Scottsdale, AZ
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Quote:
Originally Posted by Johnny Makarov
Those shortsellers on Westjet after the Boeing Max fiasco are screwed! up 60% from Friday.
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This was the first thing that came to mind.
__________________
It's only game. Why you heff to be mad?
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05-13-2019, 02:04 PM
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#13
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Franchise Player
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Quote:
Originally Posted by Fuzz
Toronto. They said they wouldn't be moving headquarters. But who knows, Toronto is where more of their flights are based out of now, but Calgary would probably be cheaper still.
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Onex is a private equity firm. Their business is buying and selling businesses. They don't move the headquarters or take over operations on any of the businesses they buy. There's no way they'd make an exception in a case where it would be a high profile negative for a huge portion of their customer base.
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05-13-2019, 02:48 PM
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#14
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#1 Goaltender
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Quote:
Originally Posted by Fuzz
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Valuing a startup is completely different than valuing an airline
They likely used other airline acquisitions as comparables
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05-13-2019, 03:06 PM
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#15
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First Line Centre
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Quote:
Originally Posted by Fuzz
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Sounds right from my knowledge of investing and business. Generally speaking, a person wants to buy a business with a price less than 10 times earnings.
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05-13-2019, 03:23 PM
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#16
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In Your MCP
Join Date: Apr 2004
Location: Watching Hot Dog Hans
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Quote:
Originally Posted by wwkayaker
Sounds right from my knowledge of investing and business. Generally speaking, a person wants to buy a business with a price less than 10 times earnings.
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You need a Net Present Value determination.
To calculate the NPV, the first thing to do is determine the current value for each year's return and then use the expected cash flow and divide by the discounted rate.
Net Present Value (NPV) = Cash Flow / (1+rate of return) ^ number of time periods
I would maybe post more on it, but I swore to myself I would never utter those words ever again after completing corp finance. I'm getting anxiety thinking about it, actually.
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05-13-2019, 03:31 PM
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#17
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broke the first rule
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A company like Onex would use more valuation methods than just a rule of thumb like earnings multiples. Discounted cash flows, payback period, future rates of return meeting their hurdle rates, etc, all based on their internal estimates of what they believe WJ's earnings/cash flow outlook looks like over the short and long term.
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05-13-2019, 04:53 PM
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#18
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First Line Centre
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Quote:
Originally Posted by Tron_fdc
You need a Net Present Value determination.
To calculate the NPV, the first thing to do is determine the current value for each year's return and then use the expected cash flow and divide by the discounted rate.
Net Present Value (NPV) = Cash Flow / (1+rate of return) ^ number of time periods
I would maybe post more on it, but I swore to myself I would never utter those words ever again after completing corp finance. I'm getting anxiety thinking about it, actually.
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You may be able to give me some direction on my current learning. I have been learning about using net present value and discounted cash flow models to value stocks. I just started trying to find downloadable excel spreadsheets of these models that I can use rather than trying to build my own spreadsheet. I have found a couple of templates but I question how good they are. Is there a resource you could point me to for more info and a good spreadsheet for the tasks?
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05-13-2019, 04:55 PM
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#19
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Franchise Player
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Wonder if they figure the shares were significantly below market and think they can add value over time and then exit with an IPO?
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05-13-2019, 05:23 PM
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#20
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In Your MCP
Join Date: Apr 2004
Location: Watching Hot Dog Hans
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Quote:
Originally Posted by wwkayaker
You may be able to give me some direction on my current learning. I have been learning about using net present value and discounted cash flow models to value stocks. I just started trying to find downloadable excel spreadsheets of these models that I can use rather than trying to build my own spreadsheet. I have found a couple of templates but I question how good they are. Is there a resource you could point me to for more info and a good spreadsheet for the tasks?
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Honestly my experience was fumbling through corporate valuations in a university course that sucked the life out of me. But if you want to learn more I would hit the library and get a CFA level 1 study module (assuming you have some kind of financial background).
God speed.
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