Bond International Share Discussion Threads

[asagi] 24/8/2016 12:41

I'm assuming these unsolicited calls are not to mom and pop UK investors. They would be to the small number of institutions that Bond would need to block the bid.

I sold some this morning. I was massively overweight.

Asagi (long BDI)

[boadicea] 24/8/2016 11:03

If Constellation are that keen - i.e. making unsolicited calls to
significant holders - then it strongly implies that it is worth more
than 105p - perhaps significantly more. They can either up the offer
(something in the 115-120p range would probably succeed imho, if done
before someone else steps in) or wait like the rest of us to see what
argument and alternatives the present management can come up with.

A search for potentially interested parties in the recruitment
software field produces a surprisingly large number, most of which
are partnerships etc, not publicly quoted but cannot be ruled out
for that reason.
The LSE quoted ones range from a minnow (Dillistone, DSG) to the much
larger Page Group (PAGE) or the diverse Hays (HAS) - and probably
many more.

[battlebus2] 24/8/2016 08:01

Yes seen that yesterday, looks like a bit of arm twisting to me.

[eezymunny] 24/8/2016 07:54

Make of it what you will!

[eezymunny] 22/8/2016 12:58

I have TNAV excluding recruitment div at c. £36.7m v mcap at £47.8m at 112p.

So proceeds of recruitment division plus property sales above a very outdated(?) NAV, minus wind-up costs etc need to be £11.8m+ to make a purchase at 112p a profitable idea.

I'm kinda tempted to buy a few more (just on a possible price/sales valuation basis for recruitment) but not quite tempted enough.

I stick!

[aishah] 22/8/2016 10:49

TechMarket View:
Friday 19 August 2016
Constellation makes last play for Bond part

It appears that the break-up of UK-based recruitment & HR software firm Bond International may well be approaching its final stages.

Near-30% stakeholder, Toronto-based ‘stealth’; software aggregator, Constellation Software, has agreed not to obstruct the sale of Bond’s HR and Payroll Software and Services Division to Tenzing Private Equity (see Bond intent on gradual dismemberment) and has extended its offer to purchase Bond’s remaining Recruitment Software Division until 8th September. Constellation is holding to its original bid price of 105p per share (see Constellation formalises bid for Bond), but not surprisingly, it has reserved the right to adjust the offer if circumstances change.

Bond’s shares closed last night at 110p. Constellation last upped its stake in Bond in November 2010, buying 8.2m shares at 75p. The Canadian firm is a canny buyer and of course has benefited from Bond’s sale of its other subsidiaries. An each-way bet that seems to be paying off.

[asagi] 20/8/2016 22:37

According to the AIM Rule 26 disclosure here:

hxxp://www.bondinternationalsoftware.com/investor-info/aim-rule-26/

Liontrust + CEO (Mr Russell) + Axa + Fidelity = 41.5% of the vote

Liontrust + CEO can stop the 105p bid dead as together they have over 25%. Are we to infer then that Liontrust has agreed to 105p? Or, is Constellation using 105p bid to smoke out another offer for the software division.

CEO + Axa + Fidelity can stop 105p bid.

I am unsure if Constellation can stop the sale of the software division to another party.

I have previously tried to calculate the level or recurring revenues in the recruitment software business. I think it may be more like £5m pa than the £10m I may have suggested previously.

I would like Bond to now give us this figure. Presumably any acquiror that they are in talks with knows what it is?

management of the disposals to date has been reasonably effective and continuation in that vein could lead to a pleasant surprise.

Agreed and I guess that's the crux of it.

Asagi (long BDI)

[boadicea] 20/8/2016 22:00

Thanks flyfisher - That is the sort of additional information we need.
I assume that property is in the accounts of the Holding company, apparently at cost (given that total fixed assets are only £1.7m). Property should have doubled+ in that time.
Revenue of 'Recruitment Group' is around £18m. I think we can probably ignore the valuation of intangibles as they are only supported by their potential earning power and can disappear in a splash of red ink.

So, say fixed assets ~£3m and an optimistic(?) 1x revenue would give us ~£21m or about 50pps. Add that to my cash estimate of 84p to give 134p.

That does make the 105p offer look rather mean..... but who is likely to bid it up?
Without competition ... and I think it would need two other contenders to be really effective ... 105p could well succeed.

However, management of the disposals to date has been reasonably effective and continuation in that vein could lead to a pleasant surprise.

[flyfisher] 20/8/2016 17:05

Boadicea, They also have the grade 2 listed offices, bought in 1998 for £1.4m, what will that be worth now?

I think they paid 1.3 times sales for the recruitment software division, would anyone have any examples of recent transactions in the same sphere.

[battlebus2] 20/8/2016 14:33

Shares mag thinks we may need to settle for 105p....

[boadicea] 20/8/2016 12:23

From the segmental results of the Disposal groups (Note 7 in the Prelims) it appears that the sold parts were the juicier bits of BDI.
After allowing for the repayment of borrowing from the 'Education' proceeds and the reported receipt from the 'Payroll' group, the cash position should be upwards of £35m or ~84pps (unless I have omitted some significant items).

This leaves the 'Recruitment' part valued at £10m. That's low on a turnover basis but given its poor recent profitability after amortisations and depreciation, probably fair enough. The question, of course, is what is it worth to someone else with reasonable synergies and clientelle opportunities?

Perhaps someone could check/confirm the above assumptions.
It is a pity that the company did not release an update of its net cash position following recent events.

[eezymunny] 19/8/2016 22:10

www.investegate.co.uk/bond-intnl-software--bdi-/rns/completion-of-sale/201608191640217196H/

Just recruitment division left then.

Que sera sera...

[asagi] 18/8/2016 18:50

Constellation's 105p offer has really undermined Bond's bargaining position with any other party. It seems that Constellation is smoking out any other offer and, obviously, any other party was waiting on Constellation's bid.

I agree that the 105p offer is inadequate. Market clearly hanging its hat on Bond's past comments about the software division:

28 June:
assets and liabilities of the disposal group comprising the recruitment software businesses have been presented as held for resale following the acceptance of a conditional offer to buy the group. The sale is expected to complete in July 2016.


22 July:
The Board believes that the aggregate return to shareholders from a liquidation of the Company, after it has completed the Acquisition, received repayment of the Loan Note, sold the Group's real estate assets, sold the Recruitment Software Subsidiaries and paid all relevant transaction costs and taxes, will result in a meaningful premium to the 105 pence per Bond Share which the Constellation Offer represents.


Asagi (long BDI)

[boadicea] 18/8/2016 17:37

Can someone explain to me in simple terms where we (BDI) now stand?

It appears we have sold the stated subsidiaries (i.e. Bond HR and Payroll
Software Limited, Bond Payroll Services Limited and Eurowage Limited) with
the approval of Constellation who nevertheless confirm their 105p offer provided
that none of the proceeds of the sale are divested from the company.

If the sale was a good deal and unless it has diminished the business value of
what remains I can only see that the offer remains inadequate. Correct???

However, as the company is now presumably cash rich, is it also now more
enticing to other potential suitors?

[cockerhoop] 03/8/2016 12:08

Statement re Confidentiality Agreement

In order to facilitate ongoing discussions between Constellation UK and Bond, on 2 August 2016, Constellation Software Inc., the parent company of Constellation UK, entered into a confidentiality agreement with Bond pursuant to which each party has undertaken to, amongst other things, keep confidential information made available by the other party confidential and not to disclose it to third parties unless required by law or regulation (the "Confidentiality Agreement").

Pursuant to the requirements of Rule 26 of the Code, a copy of the executed Confidentiality Agreement will be made available at www.heraxpartners.com no later than 12:00 noon on 3 August 2016 (being the business day following the date of execution of the Confidentiality Agreement).

Terms used in this announcement shall have the same meaning as in the firm offer announcement made by Constellation UK under Rule 2.7 of the Code on 30 June 2016 unless stated otherwise. All the times referred to in this announcement are London times.

Further announcements will be made as and when appropriate.

[battlebus2] 27/7/2016 18:01

Maybe they will throw a 120 bid on the table...

[eezymunny] 27/7/2016 17:17

Yes, sounds like they will be happy to pay 105p/share even if the payroll stuff completes (ie they just get the recruitment stuff and cash pile). Perhaps a nice backstop if recruitment sale fails. Perhaps not!

[battlebus2] 27/7/2016 16:26

Extension to posting of offer by Constellation. Funny old world.

[cockerhoop] 25/7/2016 12:12

I think we both agree that the recruitment division is hard to value. As negotiations are 'advanced' I imagine the board knows the price they're likely to achieve so it all boils down to how they define 'meaningful premium'.

I know it doesn't sound like it but I do hold a few of these and hope you are correct!

[cockerhoop] 25/7/2016 10:18

The recruitment division has not made a meaningful profit since 2008!

I held Gladstone when they were taken out by Constellation for a modest premium, they're certainly don't overpay for their acquisitions but how do we know that as a 30% shareholder they're not just ensuring that the sales generate a premium to 105p to protect their investment in BDI and move the sales process on with no real intention of taking the company over?

Time will tell if the 105p was finely judged but FWIW i think the return will be closer to 115p than 131p