Frontline Fits Neatly Into Roper’s Acquisition Mold, but Our Valuation Remains Unchanged

We see no reason to change our $520 fair value estimate following our review of wide-moat Roper's acquisition of Frontline. We’d already been incorporating unannounced acquisitions in our model. The 2023 EBITDA contribution from Frontline is only modestly lower than what we previously assumed for acquisitions. While Roper is acquiring better businesses than its core, it’s still paying up for these businesses and their corresponding earnings contribution. The all-cash deal values Frontline at $3.375 billion, or $3.725 billion coupled with a tax benefit of approximately $350 million. This implies Roper is paying just over 9 times revenue or just over 19 times 2023 EBITDA for Frontline.