Equals Takeover Rumours (EQLS)

They're going to blow past FY24 estimates (£23M EBITDA). Solutions is already doing £50M per year, at 60% gross margins, growing 70% y-o-y, and that doesn't reflect Europe which should start ramping later this year. With this momentum and scalability it is easy to see them hitting £150m revenue and £50m EBITDA in a few years, at which point market cap should be at least 150% higher than today. I assume the sticking point in takeover is that EQLS BoD / management can see a very viable path to that £50m EBITDA and a >£3 per share stock price within a couple years, whereas Madison Dearborn isn't willing to pay for the growth.

I agree with Hamid, the takeover/strategic review has kept a lid on the sp. I have seen it before in other companies They should reject bids which don’t materially increase the value and focus on the business It hasn’t helped the sp and their enthusiasm appears to have disappeared (whether that is to comply with regulations in such an event) I think if it weren’t for this exercise the info coming out of the co would have been much more upbeat and the sp would be much higher by now

I actually think all the takeover talk is holding back the SP. We should be saying put up or shut......we have a growing and very profitable business to run

Negotiations of course remain confidential but a number of lumpy sells have taken place this week. I'm happy to be proven wrong but I have a feeling there won't be any significant announcement regarding a possible takeover.

While Equals is likely to post an increase in profits.next week, I'm beginning to think there'll be no news on a possible takeover and can see the share price dropping back as a consequence. Happy to be proven wrong.

Gresham computing subjects to takeover. Equals next then Celebrus. Bango less likely but at risk

With two bidders now at the table, no one party can control the narrative. We will see how it unfolds. Very surprised that the share price is broadly where we were before any strategic review was announced. Given the business is performing strongly irrespective of takeover possibilities, the current state of play means that the risk/reward profile is very favourable with far greater upside potential than downside risk which is the reverse of what you would typically expect in this sort of situation.

I totally agree with all of the above so why are they still under 1.20 when they have two potential acquirors ........it makes zero sense to have no takeover premium in the current sp.

The longer it goes on the more likely a takeover

From the article There is potential for further M&A activity to boost its coffers, too. For instance, Madison Dearborn Partners has a Takeover Panel deadline of 21 February 2024 to announce a firm intention to make an offer or declare that it does not intend to make an offer for Aim-traded Equals ( EQLS:113p). DSM’s holds a £1.9mn stake in Equals and there is scope for a 50 per cent bid premium if a takeover is made.

To provide a little context regarding timings, here is a list of companies still under potential offer since the period commencement date (Taken from the Takeover Panel Disclosure Table): 01-Nov-2023: Equals Group plc 31-Oct-2023: Sopheon plc 18-Oct-2023: Kin and Carta plc 03-Oct-2023: TMT Acquisition plc 15-Sep-2023: Premier Veterinary Group plc 11-Jul-2023: STM Group plc 06-Jun-2023: FireAngel Safety Technology Group plc 18-Apr-2023: Advanced Oncotherapy plc 13-Apr-2023: Network International Holdings plc 12-Apr-2022: Impellam Group plc

Patience is required but the first job of management is to run the business. I hope that they don't take thier eyes off the ball with all of the takeover complexity. red

I agree patience is required as always in this type of situation. This is a solid company. The price was as high as 115p in the autumn last year well before any takeover talks were announced. So the downside risk if talks fall through is not great even if initially the price suffers short-term setback.

Shareholders just need to be patient. Another of my stocks, Smoove (SMO), was approached in April last year and the process lasted 6 months until October, with the PUSU deadline being extended for 5 consecutive months before an agreed takeover deal was finally announced in October.

I suggest that the length of time could be because a more complex deal than a takeover is being discussed. apad

do we know if we're still going to get the detailed end of year trading update next week whilst the takeover rules are in place? I hope the takeover talks haven't had any impact on growing revenue. I was hoping EQLS would beat their increased market expectations

What's the deadline for an announcement regarding a possible takeover?

How other companies, particularly those in different business sectors, conduct their affairs has little relevance to Equals. I have no idea why DX has recommended a takeover offer price, which you describe as "measley", or why their directors and major shareholders are happy to accept it since I'm not a shareholder in that company. Contextually, it is not an analogous situation to Equals. If you're a shareholder here, and you have a cynical view of the the Equals BoD, then you can always sell out.

Tomorrow is the last day In accordance with Rule 2.6(a) of the Takeover Code, by not later than 5.00 pm on 29 November 2023, each of Fleetcor Europe Limited and Madison Dearborn Partners, LLC must either announce a firm intention to make an offer for Equals under Rule 2.7 of the Takeover Code or announce that it does not intend to make an offer for Equals, in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Takeover Code.

I would be somewhat surprised if Madison announce anything. Fully expect the PUSU date to be extended two or three more times, given the nature of having to make an announcement first place. Of course, if that is the case it infers Madison are seriously interested but to announce a definite intention to proceed after such a short length of time seems a bit racy to me. Also, other parties may be interested in Equals and there is a mechanism in the Takeover code which does not, at this stage, require an announcement. ref hxxps://code.thetakeoverpanel.org.uk/tp

The more I look at the announcement the odder it appears. It seems to exclude any other potential acquirer. In accordance with Rule 2.6(a) of the Takeover Code, by not later than 5.00 pm on 29 November 2023, each of Fleetcor Europe Limited and Madison Dearborn Partners, LLC must either announce a firm intention to make an offer for Equals under Rule 2.7 of the Takeover Code or announce that it does not intend to make an offer for Equals. I heard that PH has not spoken to the management since the announcement - that in itself is odd if he has has such a large holding....I would want to know what prompted their decision to try to sell up.

Big7ime, I've copied an extract from the takeover panel rules that covers two possible scenarios (Thanks to Paul Scott on Stocko in ref to Halfords). My understanding of silly offers is that they are ignored. 2.2 WHEN AN ANNOUNCEMENT IS REQUIRED An announcement is required… … (c) when, following an approach by or on behalf of a potential offeror to the board of the offeree company, the offeree company is the subject of rumour and speculation or there is an untoward movement in its share price; (d) when, after a potential offeror first actively considers an offer but before an approach has been made to the board of the offeree company, the offeree company is the subject of rumour and speculation or there is an untoward movement in its share price and there are reasonable grounds for concluding that it is the potential offeror’s actions (whether through inadequate security or otherwise) which have led to the situation;

Issuing now would make it seem as if takeover talks are more serious (In my opinion)

Looks like pure greed to issue these just before a possible takeover. Last year they were issued mid December !

On the Takeover Panel Disclosure table HTTPS://www.thetakeoverpanel.org.uk/disclosure/disclosure-table We see all the offers we know of in the Market, ScS, Ergomed, Fire Angel etc etc. Is it significant that under EQLS we see Maddison Dearborne described as "Offeror"?

I don’t want a bid either and I reckon neither do the directors, and as somebody else said, the US are pouncing on quality techs at silly prices. With the market possibility at a low, if a bid were to come in, they want to make sure others have had opportunity to compete and see the value and therefore hopefully value the business at a more decent price. So I think this is just getting the word out and preventing a takeover at a silly price. It should have boosted the sp but with the mkt still at very low sentiment that will take some time. You are now starting to get some big % rises on no news in stocks at rock bottom which suggests we could be at bottom and as liquidity is very low. Interesting times ahead, I think 2024 will be EQLS year, I can easily see 300p in not too distant future. Fwiw, dyor

Hopefully the second named party won't reject the possibility of a takeover, as that would really not look good, and may even have ramifications in terms of 'falsely ramping the sp'. Fingers crossed IST did not act in haste.

Brummy... My view is that this Strategic Review is all about Equals Money Europe. The CEO has said that EME will be running by end of year and that they will be initially focusing on selected parts or countries of the EU. But time is of the essence - given that they currently have the leading technology they will want to exploit that advantage asap in the EU. It's going to take other companies time to develop similar tech, but they will get there sooner or later. With access to much deeper pockets via a takeover (or partner), EQLS would have the resources to be able to go for a much bigger slice of the EU cake straight away, while their offering is still unique. Any comments welcome.

Brummy. Much appreciated. Obviously you know the company better than most. So many thanks. Look forward to it. Cant think of a specific question, but on the fundamentals alone I think we are all surprised that the sp has not rerated further. EQLS has outperformed from the period of time when they were competing with ‘no fee companies’ which is not a realistic base. Maybe somewhere between there and the float price is more realistic, since when the business has and seems set to grow considerably with or without a partner or takeover. Maybe it is a question of help to accelerate the business to stay ahead of the game

Very interesting, surprised the company went public with that level of details? EQLS is likely to generate say £100m this year in revenues, what would the be the possible likely effect of any moves towards partnering with those types or a complete takeover ie eqls be attractive for other non revenue related reasons? Too many questions I have but any feedback appreciated.

They dont need to raise £5 from shareholders, esp given they have just received court approval to return £25mm to shareholders. What is new is 1.5p dividend four 2023 instead of expected 0.5p. ANy hint of a takeover and these would be way north of 120p imo.

I'm sure a takeover would need to be at a significant premium with the company on a positive trajectory and cash accretive.

The 'raise' story at 105p -120p was from Betaville in August 2019 so if there is a 'new' story maybe it is a takeover

my preference would be for a bid! potentially an old betaville story re capital raise? "Equals Group, the London-listed banking and payments company, is said to be preparing to tap up investors for fresh equity capital ahead of another multi-million pound takeover deal. People claiming to be familiar with the matter said Equals Group is looking to raise around £5 million, possibly via a placing of new stock with investors. The new stock could be placed at between 105p a share and 120p a share, said people claiming to be familiar with the matter. It’s believed Equals Group, formerly known as FairFx, is raising the money for potential acquisitions although it’s not clear which companies the company is targeting." The £5m makes little sense

Can you post the article? its behind a paywall. I've heard its a takeover bid not a capital raise..

No there isn’t ! It’s a takeover story