- Rogers ( NYSE: ROG ) dropped 2.1 % amid a sell-side note that speculated about a potential price cut with its planned sale to Dupont ( NYSE: DD ) if the deal were to hit the Nov. 1 termination date as China antitrust approval is still pending.
- Barclays sees a a "high probability" that the $5.2 billion deal gets done, though ROG/DD is a unique deal where a "renegotiated lower price" scenario may be amenable to both parties," Barclays analyst Michael Leithead wrote in a note on Sunday.
- "We think management still wants the business, but at a lower price if they could legally/mechanically do so," Leithead, who has an equal weight rating on Dupont ( DD ) and price target of $64.
- Dupont ( DD ) likely "very much" still wants the Rogers ( ROG ) business, though the vale of the transaction has "changed considerably" over the past 10 months since it was announced. While the deal was originally valued at ~19x 2022 estimated EBITDA of ~$270M, the value today appears to be closer to ~28x EBITDA of ~$185 million, according to Leithead.
- Rogers ( ROG ) standalone value if no deal with Dupont ( DD ) were to happen is around $200/share, about 20% downside from current levels, Leithead wrote.
- Leithead said on a "relative basis" he believes that it would actually be better for Dupont ( DD ) to use cash to repurchase shares rather than complete the Rogers ( ROG ) deal.
- Barclays isn't the first sell side shop to opine on a possible price cut a the deal continues to be hurt by delayed China antitrust review. Earlier this month BMO analyst John McNulty wrote that he sees a possible cut if the deal isn't done by the Nov. 1 walk date, especially as it appears the business is "clearly running under" managements' estimates for $270 million in 2022 EBITDA.
- Earlier this month a report circulated that the antitrust review process by China's State Administration for Market Regulation appeared to be moving along and engagement may start soon.
- Last month a Stifel analyst predicted that the deal would still be consummated.
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Rogers falls amid note about potential price cut for Dupont sale