Description

Deluxe is the largest check printer in the world.Obviously a very low or even a slightly negative growth business.The company generates a huge amount of free cash,the core biz should throw off 180-200 million of free cash before dividends.Pays 1.48 dividend a 6.5% yield,have been using the remainder to buy back stock or make strategic acquisitions.They recently merged the non-check printing parts and took public Efunds symbol EFDS trades about 11 1/2.They own about 40 million shares.The net enterprise value for the core biz is 1.2 billion.You are paying 6.5x free cash for the dominant company in the industry.Another way to look at it is it generates a 15% after tax free cash yield,over two times the bond yield.
If you net out the 6 dollars of value for Efunds you are paying 7x earnings and creating a 9% yield.

Catalyst

The company has commited to spinning off Efunds or doing an exchange offer
in 3 months.The spin gives you the value of Efunds,but an exchange would be even better.That would reduce the shares out pretty significanly which would raise eps and dividend yield.