Accumuli Share Discussion Threads

[boadicea] 01/4/2015 08:50

Having checked the terms of the offer, it is clear that it is intended to be implemented by way of a 'special resolution'. Shareholders should note that this requires a 75% majority, not 50%, and therefore the undertakings by 57% of shareholders is not conclusive. See-


The Offer Document merely refers to 'requisite majority', which is a clue that it is not a simple (i.e. 50%) majority.

To quote from the offer -
"The irrevocable undertakings given by those Accumuli Shareholders will cease to be binding if the Scheme or the Special Resolution to be proposed at the General Meeting is not approved by the requisite majority of Accumuli Shareholders at the Court Meeting or at the General Meeting respectively.....

Additionally, the irrevocable undertakings become non-binding in the event of a qualifying counter offer -

"Those irrevocable undertakings will also cease to be binding if a third party announces, before the Court Meeting and the General Meeting, a firm intention to make an offer for the whole of the issued share capital of Accumuli under which the value of the consideration offered for each Accumuli Share is more than 10 per cent. greater than the value per Accumuli Share offered pursuant to the Acquisition."

At the current NCC share price of ~196p, the counter offer would need to be anything above 32.85p, i.e almost the same value initially quoted in the offer but which has since fallen with the NCC share price to 29.86p

Readers may wish to note that culprits in the proposed sell-out, with the number and percentage of their holdings (in addition to the Directors) are:

Downing LLP ____________15,642,057 9.8%
Hargreave Hale Limited _10,328,150 6.5%
Harwood Capital LLP ____ 9,900,000 6.2%
Jarrod Potter __________10,001,357 6.3%
Livingbridge VC LLP ____36,712,129 23.0%
Unicorn AIM VCT ________ 6,154,346 3.9%

[aylingd] 31/3/2015 18:54

Good to see a worthwhile discussion taking place here (even if it is after the horse has bolted).

If, by any chance, the Board monitor this bb - shame on you, it is the shareholders that own this company not you !

D.

[igoe104] 31/3/2015 18:15

Totally agree, NCC have a great deal.

Why would any ACM share holder agree to these terms ?

Director`s are looking after themselves and haven`t considered the holders at all in my opinion.

Job for the boy`s comes to mind.

[boadicea] 31/3/2015 16:33

The price action here - and in NCC - is odd to say the least.

NCC holders don't appear to like it - understandable if the offer were over-generous, but it isn't.

ACM holder's (except for the 57% who 'agreed' beforehand) don't like it which is not at all surprising as the offer is below values recently seen and below what some of them have paid for the shares.

My next task is to check on the small print get-out clauses available to the 57%!
(Does anyone know off the top of their head?)
Typically it will be a counter-offer at a price some specified amount(%) above the existing moving target offer, which is on the slide with the NCC sp, now ~194p compared to ~225p a couple of weeks ago.

[igoe104] 31/3/2015 14:36

I`m surprised there isn`t a counter bid, ACM are great value at 32.8p, even less now with the NCC drop.

[boadicea] 31/3/2015 14:23

If holders of 10% (institions?) are unhappy, I suppose they could requisition a company meeting over the issue. It might not succeed but would be rather unwelcome, I suspect, by causing delays etc and might even encourage a change of plan.
Unfortunately my ~0.1% wouldn't get us far towards the 10% required!

The best hope might be a counterbid..... ECK?... who just reported encouragingly on their Q4 and is a slightly larger company than ACM by current capitalisation.

[mazarin] 31/3/2015 11:26

A disappointing 'end' to a promising 'future' and I don't really see why NCC holders would approve of such a deal, that since its announcement has seriously knocked back their MCap. Its clearly, to date not seen by the wider market as 'value enhancing', and as for ACM management rationale - unbelievable...?

[buffetteer] 31/3/2015 11:05

Super
It really is true unfortunately.
The companies where the management own the majority of shares in my portfolio have done extremely well over last 3 years - Dunelm, Vp, S&U, Dart, Maintel, Gleeson, Utilitywise and I'm hoping similar from newish holdings Dillistone & Ergomed.
All have most of their wealth tied in with us PIs just as John Lee professes .

[supernumerary] 31/3/2015 10:29

Well the buyers are spending £5M to drive a wedge between managers and owners, so it's hardly surprising is it?

[aylingd] 31/3/2015 10:21

Agree, a very miserable end to a promising story.

The decision to announce the t/o on the same day as stonking results looks bizarre, a cynical person might say it was designed to keep the ACM share price in check.

Difficult to understand how 57% shareholders & directors believe this is the best deal they could get, of course we are not privy to what deal the ACM directors have been offered. Looking at the slide in the NCC share price since they don't rate the deal either.

Unfortunately, as mentioned above, it appears to be a done deal.

Message to self 'be careful investing in companies where directors have little or no shareholdings'.

D.

[igoe104] 31/3/2015 08:42

I can`t believe 57% have approved of the deal, unbelievable.

If it was 36p - 40p, yes.

Shareholders have been sold down the river.

[rivaldo] 31/3/2015 08:28

Well, this must be the most miserable takeover bid I've ever been a shareholder in.

ACM is now on a P/E for the year starting tomorrow of just 12.9. And the share price is only just above where it was almost a year ago.

I do agree that having looked more closely at NCC they're more attractive than they have been for a while. But I'd love to know if any of ACM's major shareholders are expressing displeasure to management.

[gargleblaster] 25/3/2015 18:09

Buffetteer - agree with you NCC is a very attractive company - its domain services are virtually unique and it is making big strides in US market. Also Mark Slater is on the share register and imv he is one of the canniest fund managers about. NCC must in all likelihood be a bid target going forward. Rating is high but it often pays to buy quality. Dyor etc.

[buffetteer] 25/3/2015 16:59

The more I read about NCC the more I like it & have decided to hold their stock after the takeover.Liberum have a target price of 250p due to the high level of US $ earnings (30%) & the increasingly valuable Assurance & Domain services .
With the recent de-rating to £2 the forward pe of 20x for may & 16.7 for 5/16 looks attractive for a business that has grown earnings 15% compound p.a in last 7 years from internal funding.worth considering ?

[gargleblaster] 25/3/2015 16:27

IC's take on it!

NCC snaps up Accumuli

Aim-traded Accumuli (ACM:30.5p), a leading independent specialist in IT security and risk management, has received a recommended cash and shares bid from cyber security rival NCC (NCC:205p). Shareholders are being offered 5.97p a share in cash and 0.1218 new NCC shares for each Accumuli share held, valuing the equity at 31p a share using NCC’s latest market price. That’s in the middle of my target price range 30p to 33p and around the level when I last updated the investment case (‘Small cap tech wonders’, 19 January 2015). It also represents a solid increase on the 23p recommended buy in price when I initiated coverage ('Profit from cyber warfare', 23 April 2014).

Moreover, the bid is likely to succeed because shareholders accounting for 57.7 per cent of Accumuli’s issued share capital have already indicated that they will vote in favour of the scheme of arrangement. The acquisition certainly makes commercial sense for NCC as it will help the group to expand its development teams, bid for projects where it needs to partner with an organisation such as Accumuli in a sole capacity, provides an opportunity to develop its core consulting business across a wider customer base, and engage with this enlarged client base on a regular rather than project by project basis.

There is commercial logic for Accumuli to be part of a much larger enterprise too given that the cyber security market is becoming increasingly competitive as it develops. As a consequence, customers are now looking for the type of round the clock operational security support and incident management offered by Accumuli in addition to NCC’s consulting capabilities. Consequently, Accumuli’s client base should reap the benefits from the extra services and broader geographic coverage that it will be able to offer as part of larger enterprise, giving it greater ability to grow its business than would otherwise be possible if it were to remain an independent company.

Importantly, the exit price seems fair at around 19 times Accumuli’s likely earnings for the fiscal year to end March 2015 based on NCC’s share price of 205p post the announcement. True, NCC shares are higher rated at 22 times earnings for the fiscal year to end May 2015, falling to around 17 times consensus for the following fiscal year, a valuation that is hardly cheap, but neither is the rating of Accumuli. The prospective dividend yields of 2 per cent on both shares are similar.

The bottom line is that with shares in Accumuli being priced on a bid-offer spread of 29p to 30.5p, it makes sense to take-up the NCC offer worth 31p a share given the unlikely possibility of a higher counter bid emerging.

[boadicea] 25/3/2015 16:14

Don't they need 75% to delist and 90% to compulsorily acquire all the shares?

With NCC now at about 200p there is virtually no premium to the ACM price of a couple of weeks ago. The slight dip since then has probably been engineered for the benefit of the t/o offer. It stinks!

[masurenguy] 25/3/2015 14:08

Executive directors had a miniscule shareholding so their prime interests did not correlate with those of the external shareholders. I assume that they personally have a good deal with NCC to develop the business, with some lucrative bonuses based upon achieving certain performance thresholds.

This kind of situation is always the risk one takes when investing in small companies where directors have little skin in the game. Fortunately I first invested at 10.9p over two years ago and even with further buys at higher pricing I'm still cost averaged in the high teens so will come out with a profit of 65% - 85% subject to the subsequent NCC conversion price.

However it's still a very disappointing outcome based upon how it could have been if a buyout had taken place another year or two down the road. C'est la vie !

[shauney2] 25/3/2015 13:34

It does make one wonder how they arrived at the 32.8p.

I take it they didn't work it out on the back of beer mat on Monday and declare the deal as done yesterday.
ACM were over 30p mid February.An Acquisition premium of roughly only 10% to the NCC shareprice at the time.

[pj 1] 25/3/2015 13:08

What a disappointing end for a Company in such a high profile growth area.

I have to assume the deal has been agreed behind closed doors, and as rivaldo points out, looks done and dusted.

Just my opinion but the fact ACM is in this position would affect my investment decisions and would class this management as suspect and would not want a part of it anymore.

[rivaldo] 25/3/2015 12:36

Agreed Boadicea, but given the high level of acceptances etc I don't see what anyone can do about it.

If a few of us PIs vote No then is anyone really going to be bothered? I doubt it. The only way the offer can be lifted or amended for more cash is surely if the big holders in ACM and/or NCC change their minds/put pressure on the respective Boards.

[boadicea] 24/3/2015 23:05

Market reaction tends to indicate the view, correctly or otherwise, that the whole (NCC + ACM) will be worth less than the sum of the separate parts.

The market cap of NCC fell by £35.5m while that of ACM rose by only £3.4m, a net reduction in combined value of £32.1m.

The share price of ACM remains below its recent peak, likewise the value of the offer, given the fall in value of the NCC paper.

Clearly there should be a rethink and there is no way I will be voting in favour on the current terms, either as a shareholder of ACM or of NCC.

My guess is that a suitably arranged collaborative agreement, whereby both parties retained their independence but coordinated their marketing approach (cross-selling, designing products to work optimally together etc.) could have been 'sold' to the market in such a way as to increase the valuation of both companies. In some ways that may seem counter-intuitive as failing to provide the advantage of supposed administrative/overhead savings. However, I suspect that much of that saving is illusory and that the combination could lead to loss of focus of the constituent parts.

Paul Scott's comment that the deal looks 'wobbly' is eminently correct, imv.

[fizzypop] 24/3/2015 21:16

Paul Scott report out commenting on ACM.

[davidosh] 24/3/2015 17:23

This link should get you there...

[hedgehog 100] 24/3/2015 17:17

Buffetteer 24 Mar'15 - 08:58 - 1428 of 1446 1 0
" ... .another good reason to back small companies with large management shareholdings ."


Buffetteer,

TGL, which owns high tech homeland security company GOS Systems, fulfils that criteria.

At 0.475p the market cap. is only £2.9m., and there has been big insider buying recently. GOS has been compared to GCHQ:

Singray105 6 Nov'14 - 10:32 - 2029 of 4601 3 1
"Indeed chesy, well everything is a gamble of course but look at what we are getting for a Market Cap of a mere 1.5 miln GBP. Been showing GOS to some friends who understand this sort of stuff and they are saying WOW! Its like a private version of GCHQ."

[supernumerary] 24/3/2015 16:52

' £5m earn-outs/incentives' - it would be nice to see the detail of that...