BNP Paribas reckons that StarHub’s acquisition of a 9.05% stake in Catalist-listed mm2 Asia should strengthen the formers original content production capabilities.
On Tuesday, StarHub announced the stake acquisition for $18 million. This will be undertaken via a share placement by mm2 Asia of 44 million new shares. The acquisition is targeted for completion in May 2016. The broker estimates that the acquisition implies c20x EV/EBITDA based on mm2 Asia’s EBITDA in the FY ended March 2015.
mm2 Asia is a producer and distributor of TV and online content, as well as film. In the FY ended March 2015, content production accounted for 62% of mm2 Asia’s revenues of $24 million, while distribution and others accounted for 31% and 7% respectively. Based on mm2 Asia’s FY15 net income of $5 million, BNP Paribas expects the acquisition will be earnings-accretive for StarHub, though marginally.
The mm2 Asia deal may be viewed as a defensive strategy for StarHub’s pay-TV business ......