Wednesday, May 13, 2009

Dumb money for American Tower?

Rumors of an AMT buyout - (courtesy of briefing, courtesy of the Economic Times) -

"Economic Times reports Essar Telecom Infrastructure has approached the co
for a possible merger or even a complete sellout according to person familiar
with the development. But, this person added that talks were only at an initial
stage, while also adding that it was too early to state if it would lead to a deal."
The street-high estimate for AMT's 2010 earnings is 1.49per
share (average is 83cents but I'll be generous), which gets them to roughly $750million in Free Cash Flow. That's a 6% yield on the company's current market cap. Offering a premium to the stock's current price would depress that yield even more. This doesn't even take into consideration the potential for a dilutive equity offering, or downside to earnings estimates. Best of luck to AMT, but that's expensive.

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