Analyst: Takeover bid could value Astral at $3.7 bil

Has weathered Canadian broadcast downturn better than competitors

TORONTO -- With over $5 billion in major Canadian broadcast mergers in currently in play, analysts are running numbers to determine the industry's next takeover target.

And RBC Capital Markets analyst Drew McReynolds thinks Astral Media could catch a bid to value the Montreal-based broadcaster at as much as $3.7 billion.

"Assigning an 11.0x takeout multiple to our F2011E, F2012E and F2013E consolidated EBITDA estimates for Astral would imply takeout values one, two and three years from now of $54/share, $60/share and $66/share," McReynolds wrote in a note to investors about the TV, radio and outdoor advertising giant.

"At almost 57 million shares outstanding, that puts the top end valuation at $3.7 billion," he added.

Astral has weathered the recent Canadian broadcast industry downturn better than most of its industry competitors due in part to key subscriber revenues from The Movie Network, its premium pay TV channel bolstered by long-time supply deals with HBO and Showtime .

Shares in Astral were trading Wednesday on the Toronto Stock Exchange just shy of $39.00, marking a new 52-week high as the broadcaster benefits from a TV ad industry rebound due to an improving Canadian economy.

Talk of Astral as a takeover target follows cable giant Shaw Communications last May unveiling a $2 billion takeover deal for Canwest Global Communications Corp. and phone giant BCE last month proposing a $3.2 billion takeover of rival network CTV.
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