Breakingviews – Capital Calls: Strategic bidders get chippy

Homes are seen for sale in the northwest area of Portland, Oregon March 20, 2014. REUTERS/Steve Dipaola

NEW YORK (Reuters Breakingviews) – Concise insights on global finance in the Covid-19 era.


PROPERTY WARS. Beware stock deals when prices are high. On Tuesday property data vendor CoStar made a $6.9 billion stock offer for CoreLogic, a smaller rival after CoreLogic agreed to an all cash-offer from LBO shops earlier this month.

The offer is 20% more than the previous deal, though CoStar doesn’t like how its affections were received. CoStar said it made multiple proposals for CoreLogic, noting it was “surprised” by the previously agreed transaction.

Yet CoStar’s offer comes with baggage. While it expects synergies as high as $250 million a year, their net present value fails to cover the premium by some $1 billion. Sure, they’d be equal to 40% of CoreLogic’s 2021 estimated EBITDA, and CoStar trades at a rich multiple.

But sellers assume the risk for a successful merger in a stock deal. With animal spirits running high and equity values at record highs, cash is king. (By Lauren Silva Laughlin)


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