Trafficmaster Share Discussion Threads

[restassured] 02/6/2010 17:05

From Investors Chronicle.....




Created:2 June 2010Written by:Steven Frazer



Rival buyers for Trafficmaster?


Trafficmaster has agreed a 47p per share takeover from San Francisco-based investment firm Vector Capital, valuing the satellite navigation specialist at £73.3m.

It is not terribly surprising that Trafficmaster has caught the eye of private buyers. A rapidly growing business it may be, but it has long been dogged by old market perceptions which have kept the handbrake on the share price. This bid values the company at just 10 times 2010 EPS, far from generous, albeit well up from our original bargain portfolio tip (Buy 16p, 6 Feb 2009).

But this is no done deal. So far shareholders representing just 28 per cent of the stock have agreed to sell, and they could switch to a rival bid priced at least 10 per cent higher than this.



IC VIEW:
Up 27 per cent since we flagged the shares' attractions after full-year results (Good value 37p, 23 Mar 2009), it's worth hanging in there for possible a higher bid. Sit tight.

[gerdmuller] 02/6/2010 16:28

Correct, as restassured said these have taken advantage of a recession induced low price in order to make a low bid.

These have now come through 3 tough years since the credit crunch took hold and made a good acquisition which will drive the price forward. This is not a co that was struggling but one which had weathered the recession much better than most.

[estienne] 02/6/2010 16:14

Don't be fooled!

The directors have cynically lined their pockets at the expense of share holders.

[lfc4ever] 02/6/2010 15:59

my penny's worth on transense posted earlier.-

it is obviously disappointing that they were not able to see it through to positive cash flow on the basis of the funds raised last time round.

however, i don't really see that there was much else they could do- if you look at the revenue which appears to have come in from the old model- ie just waiting for mass market tpms and torque- then it looks as though it has been approximately nil. so, if they had not gone down the new route, of actually trying (and succeeding) to sell products, we would be in a position of continuing cash burn, and once again, entirely in the hands of a couple of oems as to whether we ever see any cash. i don't see there would have been any viable future for the company at all following that model.

secondly, i said the proof of the pudding if there was a shareholder would be whether directors bought in. and they are buying in. the directors have got largish sums tied up in the company and are committing more.

moreover, the offer is open to shareholders (and, in any event) anyone can today buy at a price not wildly unadjacent to the offer price.

I certainly don't see that anyone is being "ripped off". If you think the fund raising is at far too low a price, so that placees are getting far too good a deal, ex hypothesi you must think the current market price represents very good value- so buy and take advantage.

the argument that we are being sold a pup rather falls down, given that directors continue to invest in said pup themselves.

therefore, i am not overly troubled by the fundraising.

what is unfortunate, however, is that it obscures what otherwise looks like a very positive message in the preliminary results, in particular in comparison to very non-committal comments by kleeman in the past.

once again, there has been delay (and, I accept, concomitant dilution), but look where we are now compared to the days when we hoped Michelin/ Lear would run with TPMS, H with torque, and we hoped intelliband might provide some cash in the short term.

now we have had actual cash from KERS (and, are bloody unlucky not to be getting a wedge more this year- but we could well next- I really can't see F1 NOT going back to KERS); we have actual cash coming in from translogik; we have renewed interest in torque from the US OEMS (which, as always, if it comes off, will be the one that lets us retire); but also, creeping up rather quietly, is another potential source of very significant income from Sengenuity/ Vectron.

My take is that, with Translogik alone, there is the makings of a "decent little business" which could be profitable and support a materially higher share price

But you then have, thrown in effectively for free given the current sp, potentially very large income from auto torque OR the Sengenuity applications.


in a way, you might say, the shape of the company looks rather similar to how it did say 4 to 5 years ago.

near term cash source- NOW translogik, possibly KERS (THEN- intelliband)
two potential mega earners- NOW auto OEM torque & Sengenuity (THEN- OEM torque & tpms with M/L)

The differences are

- that intelliband never produced a dime (and, frankly, ever got off the drawing board so far as I can see), whereas Laren is out there earning cash, and KERS has proved itself as a revenue stream, albeit one, obviously dependent on Bernie's whims.

- that M/L was not what it appeared- it was effectively a free option to those companies who, it appears with hindsight, were not truly interested. The Sengenuity crowd, so far as one can judge, seem much more serious, and Kleeman saying they could produce signficant revenue in 2012 is a distinct change in tone.

being frank, the oem torque looks as much as a punt as it ever did... but if it comes off....

So, I am pretty sure I will be signing up for as many shares as I can.

A

[lfc4ever] 02/6/2010 15:58

my tfc holding is being transferred into the trt open offer.

[lfc4ever] 02/6/2010 15:58

if you like a high risk, but potentially very high reward, have a look at transense- trt.

further fundraising just announced has led to a bombed out sp, but, they really are on the brink of profitability.

the management team include ex shareholders who staved off a sell off a couple of years ago, all are heavily invested and are subscribing heavily in the new issue.

they are putting their balls on the line.

sp sub 5p today.

could be bust in 2 years.

could be a 10 bagger if either of the two biggies in the pipeline comes off.

at this level, i really could not recommend it highly enough- if you are happy with risk.

it is not for the faint hearted though.

[restassured] 02/6/2010 15:11

I bought some at 9p, when the stockmarkets collapsed,but I still think we are being undersold.

There is nothing wrong with trying to extract the best price for something.

I am not a registered charity!


ps Anyone got any other decent stock ideas? I have got some MONI and BLNX as speculative smaller co's.FRES as metals play.

[samsingh] 02/6/2010 15:09

You are spot on Rest

[lfc4ever] 02/6/2010 15:06

for pretty much everyone who bought in the last 2.5 years, 47p is a profit. for many, a very substantial profit.

[tratante] 02/6/2010 14:57

well you could argue that they happen to be the ones with most to gain after buying in a recent dip - but I know what you mean.

It does seem paltry given the low PE, but I agree with ifc, if there is no counter bid, then this is the only game in town and we might as well take it. Better than the building society.

[restassured] 02/6/2010 14:46

Creating a false market by driving down the share price even though the buyers
significantly outweigh the sellers is manipulation.
Especially when it causes investors to act in a way they otherwise wouldn't.

I reported this ages ago to the FSA.

I would go so far as to say it looks very suspicious that the two institutions that loaded up on shares a few weeks back are the same ones agreeing to the deal.

Both Schroders and Aberforth dramatically increased their shareholdings recently.

Does it not strike you as a little strange that they are the two agreeing to the deal?

This stinks!

[lfc4ever] 02/6/2010 14:41

how was it manipulated?

if the price goes down, those who think it is good value can always buy.

[restassured] 02/6/2010 14:40

It is a disgrace because the shares have traded at 72p in the last three years.

Cybit got taken over and in that case they stated that the bid was the highest price in over 5 years.


TFC came out with "this traded at an average of x in the last few months.

During that time we know the share price was heavily manipulated,especially just after the results,enabling Schroders and Aberforth to load up on shares.



How about the fact that we stood by during the recession,only to be screwed as soon as it is starting to end.


Once again directors are feathering their nests at the expense of shareholders.

[lfc4ever] 02/6/2010 14:38

i am afraid that rounding up shareholders to vote against this is madness, unless there is another offer on the table first.

if this offer is rejected, with no other offer on the table, the company will be viewed as a basket case and any other bidders put off.

the proper sequence had to be for a higher bidder to come in first.

if no-one is prepared to come in with a higher offer, then one has to conclude that 47p may be the fair market price.

[snowman10] 02/6/2010 14:23

TIGER HAS BEEN ON THE BLOWER most of the morning at this sell out by the BOD.

The fact that the non-excs who are there to protect us, have allowed this silly figure of 47p to even go forward means they all should go.
The directors may well finish up with 10% of the company and more if they hit targets THEY know will be made.
A massive protest at the AGM may be the only route.

The press will pick this up and feeling is growing that on a p/e of about 9 ( and thats been talked down) this is ROBBERY.

Snow
Ps Tiger will be lining a few heavy holders up to vote against. Circa 10% in the bag to date. 15% more needed.

[tratante] 02/6/2010 12:33

I would sit tight and await developments as it usually says in the IC!

[gerdmuller] 02/6/2010 11:34

Trading update
Trafficmaster has made a solid start to the year and remains on track to deliver
against expectations for 2010. Overall revenues to the end of April were 5%
ahead of the same period last year.

That was said only a couple of weeks ago so yes it looks like they are being bought off.

[a0148009] 02/6/2010 11:20

Yes - looks as if they are throwing in the towel - unless as you say business outlook has deteriorated, however there is for them the security with a larger company and they keep their jobs.

AO

[gerdmuller] 02/6/2010 10:51

Commenting on the Acquisition, Alan McWalter, Chairman of Trafficmaster, said:
"The Independent Directors believe that this transaction secures significant
value now for Trafficmaster shareholders, and outweighs the alternative that
could be derived should the Company continue to remain publicly quoted and to
pursue its own growth and acquisition strategy.

Interesting to know what he means by that.

Is it that the financial outlook is not as good as they have been leading us to believe?

Or that management is so poor they think 47p is impossible to achieve in the near term without the help of others?

All sounds pretty pathetic to me.

[a0148009] 02/6/2010 10:32

GerdMuller mein freund.

I have amended my typo in previous post from 'by' to 'buy' whoops.

Yes- but there is a time value premium included in the price.

I bought more Sept at 47.10 average now 47.00, I would hope deal would be resolved by then - there has to be some disgruntled institutions.
I agree this price just not feel right and if cheeky should flush out other parties.

AO

[gerdmuller] 02/6/2010 10:14

A0148009

IG are offering almost the bid price to sell.

I can sell my DEC 2010 contracts for 46.48p

That seems very high for this stage of a bid. I think the market is expecting more.

[tratante] 02/6/2010 10:13

Garmin might have money burning a hole in their pocket having failed to get Ray. with basic sat nav available almost free, the money in the future is going to come from data supply and value added, just what tfc do.

[orange1] 02/6/2010 10:03

Something not quite right with the FMS acquisition it seems as Mr. Henley seems now prepared to accept far less than the contingent consideration of 82% of US $6,000,000 plus shares which he could have expected under the original agreement with TFC with regard to 2010 and 2011:

"13. Arrangements with Mr Henley
Mr Clifford Henley is the Chief Executive Officer of FMS, a subsidiary of the Company.

On 17 January 2010, an agreement was entered into between Mr Henley, Teletrac Holdings Inc., Teletrac FMS Inc. and FMS relating to the merger of Teletrac FMS Inc and FMS. The initial consideration payable under that agreement comprised a payment of US$6,900,000 in cash (subject to adjustment) and US$350,000 by way of a conditional allotment of ordinary shares of 5 pence each in the Company to Mr Henley pursuant to his employment agreement. The allotment of these shares was deferred for a period of one year. Pursuant to the initial agreement, contingent consideration based on certain performance metrics being met in the calendar years 2010 and 2011 may also become payable, up to a maximum aggregate amount of US$6,000,000. Conditional upon completion of the Acquisition, Mr Henley, who has the right to receive approximately 82 per cent. of this payment, has agreed:

(a) to modify the terms of such payment as it relates to him only, such that a maximum aggregate amount of approximately US$2,425,000 (payable in a combination of cash and Vector UK ordinary shares) may be paid to him; and

(b) that his conditional allotment shall be cancelled in exchange for the payment to him on or as soon as practicable following the Effective Date, of US$285,000 (which reflects the value of the conditional allotment described above, after allowance for certain working capital adjustments)."

[restassured] 02/6/2010 09:59

The bid is a measly 1.2 time sales.

Trimble Navigation bought @Road for 4 times sales.

The equivalent of 152p a share