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Saturday, November 03, 2007

Amateur valuation fundaes!

This proposal isn't like most out there (small fry buying company 10 times their size, etc.) which are completely outside the realm of possibility.

ADBE's market cap is 16% (27 Billion) of AAPL's market cap (167 Billion). APPL has $15 Billion in cash on the books, so this couldn't be an all cash deal, but it could be a mix of stock and cash or an all stock deal.

It is worth considering an AAPL acquisition of ADBE. Of course, AAPL would have to offer a premium. If I was putting together the deal, I would offer 1 AAPL share for 4 ADBE shares and $10 a share in cash.

This would value ADBE at 46.75 + $10 = $56.75 a share. This is an 18% permium to today's price. That is a reasonable premium on ADBE's current valuation.
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