Bob Peck: comScore-Rentrak Merger Has 'Strategic Merit,' Notes Combined Company 'Creates Stronger Competitor'

• COMSCORE, Inc. SCOR will acquire Rentrak Corporation RENT in a stock-for-stock transaction, valuing the deal at around $888 million.
• Bob Peck of SunTrust Robinson Humphrey is "positive" on the deal given its "strategic merit."
• Peck maintained a Buy rating and $65 price target on shares of comScore.

comScore announced after Tuesday's market close that it will acquire Rentrak in a stock-for-stock transaction, valuing the deal at around $888 million based on comScore's after-hours trading price of $45. The deal represents an approximate 19 percent premium to Rentrak's closing price of $43.39.

comScore shareholders will own 66.5 percent of the combined company with Rentrak shareholders owning the remaining 33.5 percent.

In a report published Wednesday, Bob Peck stated that the deal was "not expected" but it has "strategic merit." The analyst noted that the two companies have partnered with each other in the past and share a common top shareholder (advertising giant WPP) who has previously called for the two companies coming together.

Peck said the rationale behind the deal is that comScore will bring its "leading" online data assets and combine it with Rentrak's "leading" TV/video on demand/movie data assets to create a "near-real-time, de-duplicated, cross-media solution to better measure advertising and content consumption."

Peck also noted that the premium and multiples being paid "appear reasonable" and if synergy targets come to fruition, the combined entity is trading at 10.5x 2017 EV/EBITDA and approximately 14x 2017 cash P/E vs revenue/EBITDA growth of 18 percent and 32 percent.

Bottom line, comScore is now in a better position to compete with Nielsen N.V. NLSN to become "the cross-platform currency."

Shares of comScore remain Buy rated with an unchanged $65 price target.