NorthWest Biotherapeutics Inc (NWBO)

[Poor Man -]

What’s intriguing is it’s very difficult to justify the acquisition price of $875 million based on the assumption of $140 million in revenue for FY 2021 with a 25% annual growth rate. Based on what’s assumed for free cash flow, maybe at best equal to 20% or so of revenue, there’s a justifiable valuation of between $600 and $700 million.

That leaves $175 million in unexplained value. If that gap is the assigned value for the 12 million NWBO shares, then the purchase price for those shares would be close to $15 per share.

The numbers can jump around based on assumptions for hurdle rates and FCF, but it appears that CR is paying a premium for those shares in the double digits.

Quote:
Cognate is expected to generate annual revenue of approximately $140 million in 2021. By expanding into this high-growth sector, Cognate is expected to enhance Charles River’s growth potential by generating at least 25% compound annual revenue growth over the next five years.