Equals Share Discussion Threads

[mcl1] 15/5/2024 10:05

100% agree with QS99 in that this reflects poorly on Equals management and Board. They put themselves in the shop window and seemingly misread the strength of their position or outside interest.

If you look at their website, MDP conclude numerous deals a year, so I'm sure they're a well oiled machine when it comes to a takeover process and are not the ones dragging their feet. So that leaves the inevitable conclusion that their indicative bid is current share price or lower.
Philip Hammond's proposal of a merger may well require more due diligence on both sides but as it's just a merger I don't see a big share price premium being achieved there. At no point has the share price really reflected the interest of two committed suitors...all along something hasn't added up.

I think Equals mgmt/ board have a big problem, sell well below what they'd hoped for,enter into the unknown with a merger, or try and carry on, but with everyone knowing they wanted out. However it maybe dressed up, I think the 'due diligence' is with the Equals mgmt and board unsure how to proceed.

[big7ime] 15/5/2024 09:54

I think the development of a second ib is positive, I can’t see the due diligence taking much longer now

[masurenguy] 15/5/2024 09:52

"Would guess that nothing so far has been high enough to really excite - no point putting something to shareholders that isn't going to get voted through. That's when the costs mount."

Good summary SpectoAcc !

[spectoacc] 15/5/2024 09:26

Results suggest the latter isn't the case, but it must be distracting.

I've no problem with them extending if it draws out competing bids.

Would guess that nothing so far has been high enough to really excite - no point putting something to shareholders that isn't going to get voted through. That's when the costs mount.

[elsa7878] 15/5/2024 09:21

Problem is that the offers are indicative and non-binding. Until they formulate an offer there's not much the mgmt here can do. I actually don't think it really matters, unless of course they're running up huge legal fees and/ or taking their eye of the ball operationally.

[qs99] 15/5/2024 08:39

This in my view now reflects really poorly on EQUALS management.

Utterly ridiculous. Having been involved in a plc takeover in my career, taking 6 months is just nonsense. Management could come out and say put up or shut up themselves or that discussions haven't led to anything so have terminated discussions, they will have to go hostile if so.....

Management showing zero back-bone here it seems in these negotiations, hope I'm wrong, but if they can't get an offer from two bidders by now, what hope for holding out for a bigger premium/price? DYOR

[owenski] 15/5/2024 08:34

We used to get occasional management interviews via Vox or similar, these have dried up due to this strategic nonsense. Must be consuming a lot of management time.

It had better be a good offer, problem is, the market doesn't seem to think so.

[spectoacc] 15/5/2024 07:45

Yes it's gone on for ever, but bear in mind they gained an extra bidder - twice in fact - and we're now in a position of competing (indicative) bids.

Could still come to naught, but I'd gladly give another month or two to squeeze out the highest possible offer.

[elsa7878] 15/5/2024 07:24

It's the company that wants to sell itself. Therefore the prospective buyers are in a position to take as long as they want/ need.

[adorling] 15/5/2024 07:24

Must be the longest due diligence process ever………it makes the Board look weak. Put up or shut up has well passed. It better be a bloody big offer when it does materialise after 7 months!

[shallwe] 15/5/2024 07:20

This is the slowest tooth extraction I have ever had, surely 'put-up or shut-up' must come into play eventually?!?!

[carcosa] 15/5/2024 07:13

The 'new' information being discussions and due diligence are "advancing" signals that the strategic review process has moved forward substantially since the previous April 17th announcement.

[spectoacc] 15/5/2024 07:10

Ha - or maybe a month later, or 7 months later.

But - two competing offers, you'd think something may yet come of it.

"Whilst the Board recognises the time elapsed since the commencement of the Strategic Review, having now received indicative non-binding proposals from both MDP and the Consortium, it considers it to be in the best interests of shareholders that the Strategic Review remains ongoing to allow further time for it to reach its conclusion."

[ashleyjv] 15/5/2024 07:08

not later than 5.00 pm on 12 June 2024

[masurenguy] 15/5/2024 07:06

Strategic Review Update and extension of PUSU Deadline

On 20 March 2024 Equals announced it had received an indicative non-binding proposal from a consortium (the "Consortium") comprising Embedded Finance Limited ("Railsr") and TowerBrook Capital Partners (U.K.) LLP ("Towerbrook") regarding a possible offer for the entire issued and to be issued share capital of Equals. Whilst the Board recognises the time elapsed since the commencement of the Strategic Review, having now received indicative non-binding proposals from both MDP and the Consortium, it considers it to be in the best interests of shareholders that the Strategic Review remains ongoing to allow further time for it to reach its conclusion.

As part of the Strategic Review, discussions and due diligence are advancing between Equals and each of MDP and the Consortium and, to allow further time for these discussions and due diligence to take place, the Board of Equals has requested that the Panel on Takeovers and Mergers (the "Panel") extends the PUSU Deadline further. In the light of this request, an extension has been granted by the Panel and, in accordance with Rule 2.6(a) of the Code, each of MDP and the Consortium are required, by not later than 5.00 pm on 12 June 2024, either to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce that they do not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

[carcosa] 14/5/2024 12:07

One way to voice concerns - other than express them here - is to email or write a letter, perhaps along the following lines(?)...


Dear Board of Directors,

As a shareholder, I am writing to express my concerns about the lack of transparency and communication regarding the potential takeover negotiations that have reportedly been ongoing for several months.

Whilst I understand the need for confidentiality during sensitive negotiations, I believe that the Board has an obligation to keep shareholders adequately informed, particularly when such a significant corporate event is being contemplated.

Lack of Information
Despite rumors and speculation about a potential takeover circulating for months, shareholders have not been provided with any substantive information from the company. This lack of communication has left us in the dark about the status of negotiations, the identities of all potential bidders, and the potential impact on the value of our investments.

Potential Price Premium
One of my primary concerns is the potential price premium that may be offered in the event of a successful takeover bid. Shareholders have a vested interest in ensuring that any offer represents a fair and attractive value for our shares. However, without any information from the Board, we are unable to assess whether a potential deal would be in our best interests.

UK Takeover Code and Corporate Governance
I understand that the company is subject to the UK Takeover Code and principles of good corporate governance, whoch after such time since the initial announcement is being stretched. However, I believe that these regulations should not be used as a blanket excuse for withholding key information from shareholders.

The Takeover Code itself recognises the importance of keeping shareholders informed and requires companies to make timely announcements in certain circumstances. Additionally, the UK Corporate Governance Code emphasises the need for effective communication with shareholders and stakeholders.

Shareholder Engagement
I urge the Board to engage in more proactive and transparent communication with shareholders regarding this matter. While I appreciate the need for confidentiality, there is certainly room for the Board to provide more general updates and assurances that our interests are being protected.

Failure to address these concerns in a timely and satisfactory manner may erode shareholder confidence and potentially lead to further actions, such as voting against the re-election of directors or proposing shareholder resolutions at the next Annual General Meeting.

I respectfully request that the Board take immediate steps to improve transparency and communication with shareholders regarding these ongoing takeover negotiations. Our investments and the long-term success of the company depend on it.

Thank you for your attention to this important matter.
Sincerely,

[carcosa] 14/5/2024 12:06

As Equals is in negotiations about being taken over or heaven forbid, a merger, and the potential parties involved are subject to the UK Takeover Code, which they are, the details cannot be discussed during an Annual General Meeting (AGM).

The UK Takeover Code imposes strict confidentiality requirements and limits on what can be disclosed regarding potential takeover negotiations before an official announcement.
Specifically:

Any meetings or conversations with shareholders about the potential offer must have a chaperone present from the company's financial advisor, who must report details to the Takeover Panel.

The confidentiality rules are intended to prevent a false market developing and ensure equality of information among shareholders during an offer period.

Therefore, the chairman would likely have to explicitly state at the AGM that no details can be discussed regarding the potential takeover situation due to the binding confidentiality obligations the company is under per the NDA and/or Takeover Code rules. Only information already made public could be addressed.

[74tom] 14/5/2024 11:57

Also worth remembering that had someone bought the business pre April they wouldn't have had to publish the accounts / annual report & refer to interest income at all...

Of course, I could be proved wrong and a bid may land, however 7 months is an awfully long time to ponder a bid if the upside was attractive.

[74tom] 14/5/2024 11:57

There is clear and obvious reason for trying to sell a business that is set to report record results. It doesn't mean that anyone will want to buy it once they've done full due diligence, but psychologically the market will usually assume that a business which appears to be firing on all cylinders will attract a bid with a substantial premium (i.e. the braindead bearbull article in the IC)

If those doing DD have stripped out interest income and determined that PAT in FY23 was only £2m then are they really going to pay an EV of £230m+ (at 130p) for it? Contrast that with the underlying Alpha Group metrics of PAT of ~£36m PAT and an EV of £700m and it looks very expensive indeed.

Ps. I've estimated £5m interest income benefit in FY23 by flat lining gross margins in solutions, white label & banking at their June 21- June 22 average, before rates started to climb. If they don't want PI's speculating on values then they should clearly split out the interest income in their accounts...

[mcl1] 14/5/2024 11:25

I think its easy to forget, that to the best of our knowledge, it was Equals who started this process. They announced a strategic review, that may or may not lead to a takeover and specifically named two suitors.

If it was a true strategic review then surely they have other options, ( raise debt themselves to take it private etc), so I feel its hard to blame MDP.

Personally I think Ian S-T and team are good at running a business, but are not good at running a small, listed company. Just not enough transparency.

[spectoacc] 14/5/2024 11:06

AGM is what, 22nd? I can see them PUSU'ing until then, or at least, another month extension but a conclusion for the AGM.

Otherwise, they won't get a lot of other business done at it..

[daveme] 14/5/2024 10:06

5pm tomorrow is the deadline for the current PUSU. Seems like another extension is in the offing. Getting on to 7 months now, surely they must be discussing something!

I just wish they either announce an offer, or announce it has all come to nothing, and we can exit this false market and concentrate on the great opportunities going forward for this fantastic company.

As someone eloquently posted previously, "Sh*t or get off the pot"!

[66fingers] 09/5/2024 22:55

I'm expecting another PUSU extension or an announcement that takeover discussions have concluded with no deal. No bad thing in the medium term in the light of growing revenues and profit, even if the share price sags a little in the short term.

[74tom] 09/5/2024 19:23

Last one for now, however the end of the chairman's statement doesn't make sense;

"with higher interest rates also contributing to EBITDA growth."

Yet surely they have to also be contributing to revenue growth given they have reconciled from gross profit contribution to PBT without including any additional income?

This would also be consistent with their 2019 treatment outlined in that annual report;

"Interest income has been included in the segmental revenue where earned."

Certainly some questions for the AGM...