In a world without Icahn, what are the XO assets and revenue stream worth?
A fair question, first let's have a poll and see what readers think.
Now for my own thoughts. XO is an odd duck, it has very valuable assets but a large revenue base that doesn't really fit those assets - hence the low EBITDA margins. But like anything else, XO is worth what buyers are willing (and able) to pay for it. We already have a few datapoints in that regard in the form of early stage offers last spring and summer. One bidder offered $940M for the wireline business and not including the NOLs, and another offered around $1B straight up. The financial advisor at the time felt these were viable options, and that was not an opinion XO was asking for. Those offers therefore would seem to be a reasonable guide.
However, we should keep in mind that neither offer was successful and both may have had some upside available if XO had been a bit more agreeable. Also, these bids were unsolicited - other bidders might show up if a real auction began and this would drive up the price. On the other hand, a whole lot has changed in the 15-18 months since in terms of industry valuations and the availability of capital. Whatever bidders might have been willing to pay then has probably declined since. I'd have to guess, however, that the two mostly offset.
So if Icahn weren't Icahn, I think XO could sell for $1B right now if they wanted to, which corresponds to something near $1.75 for common shares. But of course Icahn is still in fact Icahn. Since the cat is still playing with the mouse and might try to eat it again at any moment, the value of the mouse is more of a theoretical than practical concept.