Can you remember a week of late in which Australia’s Macquarie didn’t buy something? Today, it’s a bunch of UK cellphone and TV antennas. Boring, right? Not when you see the price tag: $5 billion. What’s more Macquarie is opening itself up to a world of regulatory pain, because after the acquisition it will control 100% of the UK TV broadcast market. Yes, 100%.
What cost a monopoly? Nicole Lee at Breaking Views says that it’s “a staggering 19 times last year’s ebitda,” and notes that “a similar business, France’s TDF, went for about 11 times ebitda only last year”. Given that earnings growth is going to be unspectacular in what is by any measure a mature market, the valuation looks hard to justify. Then again, this kind of thing seems to be a Macquarie speciality:
The real reason for paying so much is that infrastructure is hot. And Macquarie clearly would rather pay up than tell its investors that prices are too high. Just two weeks ago, its European infrastructure fund paid about 20 times 2006 ebitda for NCP’s UK car parks business.
Admittedly, car parks are valued more on the value of their real-estate than on the amount of their earnings. And if Macquarie can get away with owning a monopoly, that could mean extra profits there. But all these deals do smell a little bubblicious, all the same.
P.S. I never did get any clarity on how much Macquarie paid for Giuliani Capital. Does anybody have any ideas on that front?