Quote from: Charon's Little Helper
Even if they did break out WoTC, as the OP articles mention, Hasbro has shifted a lot of things related to the IPs out of the direct control of WoTC - (it looked like things such as having a different group make D&D board games etc) - so a breakout wouldn't show the whole picture of what owning WotC is bringing to Hasbro - as there is no way that anyone would buy WotC without their IPs intact.

Companies and brands with *way* more complex contract and supply chain structures than board games, card games and book games trade *all the time*. There are mountains of M&A lawyers and bankers who spent every waking hour of their lives figuring out how to make these deals work. I feel confident that if Hasbro wanted to sell WotC, they'd be able to make it happen pretty easily.

Anyway, my original point was only that if you wanted a *ballpark estimate* of what WotC's worth, you take a comp like the Asmodee deal and apply its multiple to WotC's EBITDA (if you can find it). It's really not a terribly controversial claim. Bankers, analysts and traders value companies this way on a daily basis. :-)

Quote from: Chainsaw on December 10, 2020, 10:21:17 AM

Quote from: Charon's Little Helper
Even if they did break out WoTC, as the OP articles mention, Hasbro has shifted a lot of things related to the IPs out of the direct control of WoTC - (it looked like things such as having a different group make D&D board games etc) - so a breakout wouldn't show the whole picture of what owning WotC is bringing to Hasbro - as there is no way that anyone would buy WotC without their IPs intact.

Companies and brands with *way* more complex contract and supply chain structures than board games, card games and book games trade *all the time*. There are mountains of M&A lawyers and bankers who spent every waking hour of their lives figuring out how to make these deals work. I feel confident that if Hasbro wanted to sell WotC, they'd be able to make it happen pretty easily.

Anyway, my original point was only that if you wanted a *ballpark estimate* of what WotC's worth, you take a comp like the Asmodee deal and apply its multiple to WotC's EBITDA (if you can find it). It's really not a terribly controversial claim. Bankers, analysts and traders value companies this way on a daily basis. :-)

I teach valuation, typically as a follow up course based on corporate finance. The general issue raised here is that of the WOTC value inside HAS versus the WOTC value outside of HAS (stand-alone along with an alternative, how WOTC might be integrated with another company). What is really key to the idea: if the former ("integrated with HAS") value > otherwise, then you'll not see shareholder pressure for a divesting move; if the former value < otherwise, you'll see immense shareholder pressure to divest.

I ran a "bottom up" valuation of WOTC about a year ago in class. We estimated the sale price would have to be at about $1.17B to succeed in the divesting move. The WOTC value inside HAS was estimated at $1.01B. That, of course, has an "integration premium" built into it, meaning that HAS is generating more value due to corporate synergies, but not a lot; mainly there's a lot of room for tapping more of the brands across the business platforms. But, HAS is pretty well run. They'll continue to work their magic, I think.

(To assess the current impact of D/E on Hasbro, here's a spreadsheet... just put in the numbers for the inputs tab and then be sure the iterations option is turned on; I am grading about 80 papers and 200 finals at the moment, so I can't run the sheet... we could see if HAS has possibly harmed its market cap in the recent shift to lowering its WACC, but off-hand, I'd be cautious... this analysts seem to have a general "hold" conclusion, though a minority have a "sell" from their outlook).

http://pages.stern.nyu.edu/~adamodar/

Go to "corporate finance" and choose the optimal capital structure tool.

Quote from: soundchaser on December 10, 2020, 11:32:03 AM

Quote from: Chainsaw on December 10, 2020, 10:21:17 AM
Companies and brands with *way* more complex contract and supply chain structures than board games, card games and book games trade *all the time*. There are mountains of M&A lawyers and bankers who spent every waking hour of their lives figuring out how to make these deals work. I feel confident that if Hasbro wanted to sell WotC, they'd be able to make it happen pretty easily.

Anyway, my original point was only that if you wanted a *ballpark estimate* of what WotC's worth, you take a comp like the Asmodee deal and apply its multiple to WotC's EBITDA (if you can find it). It's really not a terribly controversial claim. Bankers, analysts and traders value companies this way on a daily basis. :-)

I teach valuation, typically as a follow up course based on corporate finance. The general issue raised here is that of the WOTC value inside HAS versus the WOTC value outside of HAS (stand-alone along with an alternative, how WOTC might be integrated with another company).

Well, I have been financing M&A for a bulge bracket firm for the past 20 years, so this is not my first rodeo. Of course a segment/brand will have different profit depending on whether it's run as a stand-alone or folded into an existing corporate structure (and dozens of other considerations). Differing opinions about the underlying margin potential in different scenarios is what drives the M&A process to begin with. For nerd games forum purposes, a simple deal-comp EBITDA multiple analysis with segment EBITDA more than suffices to get your ballpark worth estimate. When someone here pulls out a checkbook, we can all happily get way more detailed, lol!

Quote
When someone here pulls out a checkbook, we can all happily get way more detailed, lol!

The ultimate evidence. Cash on the table.

Quote from: soundchaser on December 10, 2020, 12:02:00 PM

Quote
When someone here pulls out a checkbook, we can all happily get way more detailed, lol!

The ultimate evidence. Cash on the table.

Haha!

Now I'm really missing MBA school and all of the wonderful argument.  ;-(

The main problem though it WOTC themselves and their ability to fuck things up sooner or later. Every damn time. These last few years alone have been a string of WOTC trying more and more to fuck things up.

At this point Hasbro is aware of it and has in the past tightened the dogs budget leash during the end of 4e. They have also stopped handing WOTC outside projects as much, or possibly at all. I am not sure who handles Avalon Hill.

WOTC and 5e may be doing good now. But WOTC is too in love with the damn "five year plan" to not fuck it up totally with a 6e. And since this is WOTC we are talking about it would totally not surprise me if they sabotaged 5e at some point just so they can start 6e because its overdue in their fucked up minds.

I was hoping against hope the "recent" install of the unit president would clean up the rogue elements. Oh well... l leadership failure is rampant. But I don't have inside scoop. And the D&D wokeness pushed me to the margins anyway. 

I think it's more likely Hasbro buys companies in the next year rather than sells them. For example, I think Hasbro may acquire Mattel in 2021.

Quote from: Mistwell on December 12, 2020, 08:54:44 PM
I think it's more likely Hasbro buys companies in the next year rather than sells them. For example, I think Hasbro may acquire Mattel in 2021.

That would be a heck of a purchase. Mattel is nearly half the size of Hasbro, and you always pay a premium when you buy a whole company. Mattel would either have to play nice and be willing to be sold for stock shares, or Hasbro would have to go into massive debt to pull it off.

Quote from: Mistwell on December 12, 2020, 08:54:44 PM
I think it's more likely Hasbro buys companies in the next year rather than sells them. For example, I think Hasbro may acquire Mattel in 2021.

I don't want to argue what-ifs, but that may NOT be the wisest move after this year. We still don't know what the Treasury is going to do when the 'RESET' happens.
Take a look:
https://www.macrotrends.net/stocks/charts/MAT/mattel/income-statement?freq=Q

The feds might stop a sale, anyway, but it would make me nervous (as an investor) due to the last few years. Of course, I'm not a finance guy, but I'd like to see what this quarter looks like before I'd buy MATTEL.

Oof, Mattel looks to be an acquisition target, indeed.