Shares of commercial real estate data provider Reis, Inc. (NASDAQ: REIS) soared 32.2% to close at $23 on the nose today, after Moody's Corporation (NYSE: MCO) announced it would acquire the company for (drumroll, please)...$23 a share!
The precise alignment of buyout offer to closing share price suggests both that (a) investors don't think there will be a competing, higher offer for Reis, and (b) that they think this purchase by Moody's is basically a done deal. But is it a good deal?
In a press release describing the transaction, Moody's and Reis note that the purchase price is around $278 million. That works out to a valuation of just under 5.8 times trailing sales for Reis (no multiple to earnings is calculable, because Reis is currently unprofitable).
Although the lack of profits might seem worrisome, Moody's is at least getting a good deal on Reis when viewed from a price-to-sales ratio perspective. Moody's own stock (which is profitable, by the way) sells for 7.5 times earnings.
The boards of directors of both companies have already approved the deal. Assuming shareholders do likewise (and given how poorly Reis stock has performed lately on its own, I don't think that will be a problem), and that regulators sign off on any antimonopoly concerns, this purchase should close in the fourth quarter of this year.
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