Cablevision Holding SA
CVH: $ 418.05
Target 17E USD 26/GDS - Ar$ 477
CVH: We initiate coverage with a Buy recommendation.
Ø On August 30, the split-up of the 60% equity stake held by Grupo Clarin (GCLA) in Cablevisión S.A. was performed. Thus a new company under the name of Cablevision Holding S.A. (CVH), which will trade in ByMA and London Stock Exchange, will operate the Cable TV, Internet, Data transmission, and Telephone services business while Grupo Clarin (GCLA) shall retain all the remaining activities and operations not assigned to CVH.
Ø It shall be borne in mind that GCLA reduced its capital by Ar$ 180.6 mln to Ar$ 106.8 and cancelled 47.7 mln class A shares, 117.1 mln class B shares and 15.8 mln class C shares. On that same day, CVH issued shares of common stock having an aggregate par value of Ar$ 180.6 mln represented by the same class shares cancelled by GCLA.
Ø In accordance with the approved split-ratio, each shareholder will receive for each share of GCLA: 0.6285 shares of CVH and will retain 0.3715 shares of GCLA, in each case class A, B or C shares, as applicable.
Ø On June 30, 2017, Telecom Argentina (TECO) and Cablevisión (CV), announced a preliminary merger agreement. As a result of such absorption, TECO shall increase its equity and capital stock issuing 1.18 bln shares, retaining 45% of the capital stock as a result of the merger. CV’s shareholders, Cablevisión Holding S.A. (CVH) and Fintech Media LLC, will receive a 55% participation in TECO post-merger.
Considering the target for year-end 2017 of $ 122 per share at which we arrive for TECO (including the effects from the merger), CVH’s equity interest in the merged company as well as the net financial debt and applying a 5% discount for illiquidity, we obtain a price target of $ 477 per share for year end 2017 for CVH. Our recommendation is Buy.