Valuations

Yesterday, the Turkish government pulled off an impressive feat by auctioning off its controlling (51%) share of the refinery group, Tupras, for the unexpectedly high price of $4.14b, which implies a market capitalization of $8.11b.  The winner is the Koc-Shell consortium.  The auction’s high price was surprising, especially given that the company was sold last year, in a similar auction that was later canceled by the courts, for a quarter of this amount.  Not surprisingly, yesterday’s auction has been met with enthusiasm by the Istanbul Stock Exchange, Turkish business circles and the press, who have called Tupras Turkey’s "diamond".

What has had me thinking is that Tupras’s sale has coincided with two other pieces of M&A news that are closer to my industry:

1) eBay buying Skype for $2.6b
2) Oracle buying Siebel for $5.85b (both links from NYT; require free subscription)

Notice the figures?  2.6 plus 5.85 equals 8.45 which is greater than 8.11. in other words, the crown jewel of Turkish economy, a 75+ year company, selling for a market-shattering price in a highly-contested auction, is worth less than the combination of a 12 year-old software company and a 2-year old telecommunications company.

The implications are complex.  It makes me feel that I am here at the right time, but makes me wonder if I am at the right place.

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