Monday, March 23, 2009

Outstanding Value for Cross-Border Strategic Investment

Companies with the wherewithal to expand through acquisition and investment stakes may be finding once-in-a-career bargains.

For example, Time Warner is purchasing a 31% stake in a Central European media company - a company whose share price was $106 last may and about $13 recently.

Time Warner deal: another strategic capitalizes on downturn

Posted on March 23, 2009 at 1:27 PM

prague.jpgCompared to the price the target's shares commanded less than a year ago, Time Warner Inc. (NYSE: TWX) is getting quite a bargain in its purchase of a 31% stake in Central European Media Enterprises Ltd. (NASDAQ: CETV). Bloomberg has the story.

As recently as May, CME's shares were around $106. Monday, even after a 31% rise driven by the deal's announcement, they were around $13. Time Warner is paying $241.5 million for the stake.

Founded in 1993 by Ronald Lauder of the cosmetics family, CME has suffered from the fact that its markets have gone from boom to an especially severe bust because of the global financial crisis.

But Time Warner obviously thinks there's long-term growth in the markets CME serves. The company has an audience of 97 million in Bulgaria, Croatia, Czech Republic, Romania, Slovenia, Slovakia and Ukraine, according to Reuters.

Time Warner's move resembles deals by some other big strategic acquirers who are using the crisis to enter new markets at attractive prices. A previous example was Abbott Laboratories' (NYSE:ABT) acquisition of Advanced Medical Optics for nearly $2.8 billion in January. AMO's shares were way down because the recession has hurt its laser vision correction service.

Look for more such deals in various sectors.-Kenneth Klee