What is the likely impact on WOW's valuation multiples (e.g., EV/EBITDA, P/E) if the transaction is renegotiated or abandoned?

Impact on Valuation Multiples

If the $5.20‑per‑share cash deal with DigitalBridge collapses or is renegotiated at a lower price, WOW’s equity valuation will be immediately re‑priced to reflect a higher “transaction risk premium.” In the short‑term the stock price is likely to fall 8‑12 % on the news (the current implied equity value is roughly $4.90–$5.00 per share, based on current market pricing). Because the transaction price sets a hard ceiling on the market multiple, a lower or absent cash offer will lift the “going‑private” premium and drive EV/EBITDA and P/E multiples toward the company’s standalone levels – roughly 8‑9× EV/EBITDA and 12‑14× P/E based on FY‑24 earnings. In other words, the multiples that have been compressed by the announced 5.20 $ premium will revert to historical, sector‑average levels.

Trading Implications

• Short‑term: The lawsuit and the risk of a renegotiated or abandoned deal create a clear negative catalyst. A short‑term sell‑off is likely, especially in the next 2‑4 weeks as the investigation unfolds. Consider a modest short position or buying protective puts (e.g., 30‑day 5‑day‑to‑expiration puts at 5‑10 % OTM) to capture the downside, keeping position size limited to 2‑3 % of portfolio capital given the high volatility (Sentiment –70).
  
• Medium‑term: If the deal is renegotiated at a modest discount (e.g., $4.80‑$5.00 per share) the stock will likely rebound, but only after the uncertainty dissipates. In that scenario a “buy‑the‑dip” at the new post‑event price could be justified, provided the company’s core fundamentals (steady cash‑flow generation, 6‑7% dividend yield, and a ~7 % leverage ratio) remain intact.
  
• Long‑term: A complete abandonment would force WOW back to a public‑company valuation, eliminating the acquisition premium. The stock would settle at a multiple consistent with peers (e.g., 9‑10× EV/EBITDA, 13‑15× P/E) and could become a relative value play versus other cable‑telecom peers if the company maintains its dividend and cash‑flow profile. In such a scenario, a long‑term position at the lower post‑news price could be appropriate if the balance sheet remains strong and the company continues to invest in fiber and 5G‑ready infrastructure.