Based on our review, CHDN was, in fact, trading at all time low valuation at the time of the transaction, with multiples at only 60-70% of historic median multiples. We subsequently looked at Churchill Downs's historical, ten-year average and median TTM (trailing 12 months) multiples of cash flow (EBITDA), operating income (EBIT), and earnings multiples. Management didn't directly answer this question, yet the the ensuing dialogue essentially highlighted where Churchill sees value in Youbet for the combined company.
On Churchill's conference call the morning after the announcement, one of the analysts asked: 'I do wonder about the timing of the transaction and the use of stock considering that you guys are basically trading at what seems to be an all-time low valuation?' ( transcript here).
