Bankrate Likely To Be Bought Out

Takeout Play. There are only a handful of small and mid cap Internet companies that have significant growth potential, that deliver double digit earnings and free cash flow growth, that have attractive assets, and strong management teams. Bankrate is one of those companies and likely the best positioned SMID cap online advertising company in the U.S. As such, we believe that RATE will likely be bought out soon with potential acquirers being Yahoo!, IAC, CBS, Newscorp, and Time Warner. CNET commanded a 20x multiple on ’08 EBITDA. Applying that multiple to RATE’s ’08 EBITDA, we get values between $65-$70. We are talking about a HUGE 60%+ upside from where the shares are trading today. On that basis alone I would be buying the shares.