Meredith Corp: What To Do With The Stock After The Time Acquisition

Meredith Corporation MDP will subsume Time Inc. TIME for about $2.8 billion or $18.50 per share, and the deal has won Meredith a fresh endorsement. 

The Rating

Jefferies analyst John Janedis upgraded Meredith to Buy and raised the price target from $56 to $80.

The Thesis

The deal is “highly accretive,” particularly near-term in the consolidated broadcast assets, Janedis said. (See Janedis' track record here.) 

Between savings in circulation, real estate and public company costs, Meredith estimates two-year synergies between $400 million and $500 million, but Jefferies predicts additional upside driven by cost reduction, portfolio trimming and digital revenues.

The combined entity is also seen to rank in the top 10 among digital operators, with 170 million unique monthly visitors, more than 10 billion annual video views and $4.8 billion in revenue.

“Although MDP is adding to the secularly challenged print biz, we think in this case the combined entity is greater than its parts — over time the market will give MDP credit for an improved long-term trajectory,” Janedis said.

Price Action

Meredith was unmoved by the Jefferies upgrade and traded up just 1.6 percent Tuesday at a rate of $68.30. The stock is up nearly 27 percent since the bid caught a Koch-related tailwind mid-November and is trading near all-time highs.

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