Share Name Share Symbol Market Type Share ISIN Share Description
Fdm Group LSE:FDMG London Ordinary Share GB00B06HK710 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 150.00p 0.00p 0.00p - - - 0 06:37:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 52.2 5.3 16.0 9.4 34.83

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Date Time Title Posts
27/5/201418:46FDMG with Charts & News564
02/2/200722:54FDM Group - growth at a very low price?3
05/9/200607:47FDMG what do you know?27

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gengulphus: My guess is that if they are forced/able to take up the 2m family shares it will put them over the 20% threshold and they will be obliged to make an offer for the whole company. What 20% threshold? I know of the 30% threshold for being obliged to make an offer, but not of a 20% one - and a quick search of the Takeover Code hasn't revealed one. And their latest RNS reveals that their stake if they get the 2m family shares will be at 23.36%, still comfortably below the 30% threshold. As Rex&Co now have 12.5% (without the 2m) the 90% threshold is dead. Do we have a bidding war ? How high will Astra go ? What will the management do if Rex takes control ? Standby for the next exciting episode.... I did spot an RNS for Rex Harbour taking/upping a stake in another company the other day so I believe it/he is a rich individual active investor. The recent RNSes do say "Rex Harbour is a director and the beneficial owner of City Securities Limited." right at their end, so yes, it looks like he is a private investor and probably quite rich - with a taste for acting privately in conjunction with his company. From his actions so far, I'd judge him (including his concert party) to be quite an 'active' investor who would probably not be happy to be left with a large minority stake in an unlisted company, and it's noticeable that he's continued to accumulate the shares after reaching the 10% required to block Astra from being able to get 100%. So I very much doubt he's just trying to stop Astra from doing that. It also doesn't seem likely that he's just trying to build his holding up to the 25% level required to block Astra from taking full control of the company and being able to delist the shares. If he is, he's probably shot himself in the foot, because I'm very doubtful that Astra would continue if they knew they couldn't at least get full control - and if he gets 25% and then Astra let their offer lapse, then the conditional purchase from the Divett family completes and he goes over 30% and has to make a full offer. He could just about conceivably be aiming for 21% (so that his holding doesn't quite go above 30% when the family holding is added), reckoning that there will be enough hold-outs among smaller investors for full control to effectively be blocked - but that's a risky game, both because there might well not be that many hold-outs and because he would have to rely on those hold-outs actually voting on important resolutions! None of the above says that frustrating Astra so that he can hang on to his investment cannot be one of his motives - just that it's not his only motive and probably not his main motive. I'm also doubtful that launching a full offer himself is his main motive, because he's failing to take a major step towards that goal. Specifically, he can release the Divett family from their irrevocable undertakings to accept the Astra offer by actually making an offer, causing the let-out about a competing offer to trigger. If he waits until they have accepted, though, they probably won't be able to withdraw their acceptance. So hanging back from making an offer of his own seems a bit counterproductive. Still, he could be hoping to get a bit more of the company comparatively cheaply before doing so, or being delayed by practical matters such as arranging finance - so I'm only doubtful about making an offer as his main motive, not certain it isn't. All in all, therefore, I suspect short-term gain is his main motive - bid Astra up as much as he reasonably can, then accept their offer. If so, he's not doing badly so far - accepting their offer now would make him (still including his concert party) up about £21.0k on the 15/12/2009 purchase, £13.3k on the 14/12/2009 purchase, £122.4k on the 01/12/2009 purchase, £30.0k on the 10/11/2009 purchase, and has pushed the realisable value of earlier purchases up by around £140.0k. Not millions, but definitely not a bad profit! The fact that he has declared himself an "offeror" by making rule 8.1 announcements rather than rule 8.3 announcements does however suggest that he doesn't want to rule out the possibility of making an offer. So overall, my best guess is that his main motive is short-term gain from bidding Astra up and then accepting their offer, with the possibility of making an offer himself held in reserve as a contingency plan if they refuse to be bid up enough for his liking. If that guess is right (and I emphasise that it is at best an educated guess!), the big question is how much Astra need to raise their offer to dissuade him from using that contingency plan. I'd love to know the answer... So would Astra! So I suspect he's keeping it very secret... So now we have the formal revised offer at 150p, with Rex and Co holding 14.75% and the 90% condition still in place it is a waste of time if Rex & Co. have not agreed to it. But as Astra now has 68.07% (at least) and Rex&Co have 14.74% (total 82.81%) still not a foregone conclusion if Rex&Co have accepted. Not technically a foregone conclusion, I agree, but in practice I think pretty close to one. Over 75% acceptances with no known large hold-outs almost always proceeds through delisting, further acceptances, and compulsory purchases to a completely successful takeover. Just wondering if it is worth trying to buy in the market up to 160p in anticipation that this is not the end....... Hmm... I can see the temptation, but I think I'll personally simply continue to await developments - without accepting the offer, until and unless it becomes reasonably apparent to me that the outcome has become practically inevitable. At present, there's too much chance of further improvements, and withdrawing an acceptance once it has been made is too unlikely to be permitted. Still, if you want to bid the share price up to 160p, don't let me stop you - I wouldn't mind the opportunity to top-slice my holding again at that level! ;-) Gengulphus
rbcrbc: Commenting on the Offer, Karl Monaghan, the Independent Director of FDM, said: "I am recommending the Offer Price of 141 pence per share as it allows shareholders the opportunity to accept the Offer at a significant premium to the pre announcement price. In my opinion, given the historic share price performance, share register structure and trading environment, in the absence of an offer for the Company, there can be no guarantee that shareholders (especially those with a significant holding) will be able to sell their shares in the market at a price of 141 pence or better in the short to medium term. The Offer Price is only 9.1 per cent. below the all time high share price of 155p which was achieved over a period of three days more than two years ago." So Karl thinks all shareholders want to sell for the best price not hold for long-term growth ????
gengulphus: The best compromise now would be for the MBO team to bite the bullet & raise the cash offer to 150p. I reckon at that price it has a chance of success. Personally, I think a better compromise would be to drop the takeover entirely and have a tender offer at 135p. It would strengthen the shareholder base by allowing those who would like to exit at 135p to do so (*), getting rid of the short-term speculators whose selling after the takeover was dropped would otherwise drive the share price down. Also, all remaining shareholders would then have an increased percentage stake in the company, and the management team could quite possibly save themselves on the basis that they had improved shareholder value by increasing EPS for the shareholders who remained. Clumsily and more expensively than necessary, I agree, but that's probably foregiveable... The only drawback of that compromise from my selfish point of view is that it's unlikely there would be a chance to pick up some more shares at prices well below the current one! An increased offer at 150p might well be preferable from the management team's point of view, and like you, I would probably reluctantly accept it - but it would be very much a second-best compromise from my point of view. (*) In principle only partially exit, but I suspect that in this particular case enough shareholders would want to hang on to their shares to allow those who want to exit entirely to do so. Gengulphus
red square: True to some extent Gengulphus, but if they're not confident of 90% or even 75% acceptance, what then? At 135p the company is undervalued, but I'd rather take the current share price of around 125 p than see the share price drift back to 100p post un-successful bid. How could the current management team stay if the potential take-over fails?
paulypilot: Hi, Paddyfool - I think there's some truth in what you say. There again, management do not "own" the client relationships, legally they are officers of the company. So if they leave FDM, and try to set up a competitor poaching staff & clients, then they would be wide open to legal action for damages to FDM against former management by whoever was running FDM after their departure. In any case, to use these sorts of threats to force through an MBO at an artificially low price, is scandalous, and morally wrong. I accept that if management were to walk, then FDM would certainly lose its drive in the short term, and might lose some clients. But would management really walk away from extremely well-paid jobs (they already take about 25%+ of profits in salaries & bonuses!!), plus the CEO would effectively be throwing away his £2.5m shareholding in FDM, and then set up a competitor, leaving themselves wide open to legal action for stealing the customer relationships & staff???? Why would they be so unprincipled & greedy, when there is no need??? All that is needed is a compromise between management & external shareholders, which has already been proposed by a couple of Instis, I believe. Along the lines of using the substantial amount of surplus cash to buy back shares (e.g. through a Tender Offer) for anyone who wants to exit. Plus management should be taking advantage of the low share price to load up with share options. All of this would see their shareholdings rise significantly over the next few years. Or what about paying bonuses in shares, rather than cash, so management again could gradually increase their shareholdings?? But holding a gun to shareholders's heads & saying "get out at this price, or else" is an absolutely appalling way to carry on. You just can't do that!! To a certain extent this is a game of poker, and whilst management do have a strong hand, they don't hold all the cards. I fundamentally believe that they won't wreck the business purely over a small difference between what price they are offering, and what shareholders would probably accept. They need to sweeten the price once more, and then I think the deal would be as good as done. And frankly, good riddance, and don't even think about ever coming back to the Stock Market. Regards, Paul.
paulypilot: Hi, I can see exactly why management are pursuing an MBO - because the share price does not reflect the excellent past performance & prospects of the business! The only real point at issue is the price. In order to succeed, an MBO (or any buyout) has to offer attractive upside to existing shareholders, which this 135p offer clearly does NOT. Therefore many shareholders, including myself, are simply going to reject the offer, and it won't proceed - because usually any VC will want to acquire all the shares & de-List. They need 75% to de-List, and I doubt very much whether that level of acceptances will be achieved - certainly not at 135p anyway. I understand that around 18% of the shareholder base is against this approach, and that's only a straw poll of a few holders, so there are bound to be plenty of other shareholders also against the 135p offer. There might be a few short-term speculators who bought in recently with the intention of scalping a few pence upside, and they will obviously want the bid to go ahead. It should also be noted that alternative proposals (including a Tender Offer, more generous share options package, etc) have been put to management by Institutional shareholders, but these ideas were rejected out of hand by FDM, without any discussion. It's totally unacceptable that FDM management think they can just steam-roller this lowball MBO through, against the wishes of shareholders. Typical I'm afraid of the very poor corporate governance with AIM companies generally. We now face a long & drawn out offer period where they try to accumulate enough acceptances to get this MBO through. But IMO it's just not going to happen, the price is too low. Regards, Paul.
paulypilot: Hi, The idea that without a bid these shares would go back to sub-100p is ridiculous! Everything has changed - we have gone from a savage bear market in everything (up to March 2009), to a roaring bull market since, especially in small caps. My small cap portfolio is up 100%'s already this year to date. We have seen re-ratings across the board. My view is that without the MBO, the share price of FDM would have probably risen higher than the current 125p. Instead the MBO proposals have been a total distraction for management and the market, as it effectively puts everything on hold, as well as putting a cap on the share price - hence FDM shares have not re-rated in line with the market. My view is that if/when the MBO proposals fail, then the share price might well initially dip say 10%, then buyers will come in & hoover up stock (I will be one of them!). Over time the share price should then re-rate to around 200p, which is easily justified on fundamentals (why do you think mgt want to buy it at 135p?!! Because they know that price is a gift!) Anyway, I'm going to fight these MBO proposals all the way, as they represent a cynical attempt to steal the company at an undervaluation from its existing owners. This is not acceptable, period. It is a shame that some shareholders take such a short term view, and are not prepared to support this fantastic company for the long-term. I'm a long term shareholder here, and I think we have a stake in a fantastic company with good operational management, and I would very much like to remain a shareholder please, so that we can share in the company's long term success. And nobody is going to steal MY shares! The long-term value of the company will drive the share price eventually, it's just that sometimes anomalies arise. Instead of getting frustrated at the share price, management should just get on with running the business. Regards, Paul.
paulypilot: Hi, FDM Directors are actually paid very generous salaries for the size of the business, although personally I don't have a particular problem with that, given that they have performed extremely well. Share options packages can & will deliver further gains for Directors over the long term, although we've clearly been through a savage bear market for small caps in 2007-2008, when most small caps lost 80%+ of their value. It's going to take time for markets to recover, but this year to date has been one of the best years I can remember in my investing career in small caps. the bottom line is that good, well-managed companies like FDM will secure appropriate share prices in the long-run, for all our benefit including management. Fair value for FDM shares is currently: net cash + 12-15 times earnings. That works out at roughly 42p cash + 12-15 times (say) 15p earnings, so that gives a share price target of 222p-267p. Given time, this share price will gradually rise to around 200p in my view, and the MBO is an unwanted distraction. Obviously if you're just a short term speculator, like page3girl, then you want to skim off a quick profit at 135p & move on, as he/she's indicated above. Fair enough, he/she is putting forward their point of view, but I strongly disagree because I like the long-term value in FDM. Interestingly, the 120p initial MBO approach had absolutely NOT been cleared with large shareholders. I contacted many of them, and they were unanimously against such an opportunistic bid approach. So why should another measly 15p on the price make any difference??? (especially since markets have been rising strongly in the past 2 months). Anyway, time will tell. Management will look very foolish indeed if they press ahead with this MBO, and then find that shareholders reject it - remember that nobody is obliged to accept a bid approach. If we collectively say "no", then the bid just fails. I've spoken to a couple of large shareholders today, who have both said they will be rejecting the 135p bid. So it's my view that this bid is absolutely NOT in the bag! If FDM ends up paying £313k in fees for this aborted MBO, then I think head(s) should roll on the Board. Usually such fee arrangements are just so that the original bidder (Inflexion) has covered their costs in the event of another bidder entering the fray at a higher price. However, no fees should be triggered if shareholders just reject the bid. But FDM have not disclosed what the terms of the 1% fee actually are, so we don't know for sure. Altogether a most unsatisfactory situation. Regards, Paul.
paulypilot: Hi, Very quiet here. This mooted MBO nonsense has been hanging over this stock for too long now - I think it's time for an RNS stating unequivocally that the MBO is NOT proceeding, because shareholders don't want to sell. It's not good for the company, or its shareholders, to have this uncertainty hanging around. I realise that the share price might well drop if they announce that the mooted bid is not proceeding, but that's fine, as I want to buy more of these anyway (as a long-term holding), as I reckon it's a fantastic investment - great company, and great management (albeit badly advised on this matter). And as shareholders, we're keeping our eye on that cash pile. A value-destroying acquisition will be voted against at the EGM, so let's not even go there please management! By far the best bet, instead of earning 0.5% on deposit on all that cash, is to distribute it back to shareholders via a large share buyback programme - which makes total sense whilst the shares are trading at about half fair value. It's also tax efficient & would hugely enhance shareholder returns by multiplying EPS & Dividend per share. Come on management, do something sensible & bold!!! These things are really not complicated at all, despite what all the fancy-talking & expensive advisers from the City - they would have been encouraging share buybacks when the price was high, because gearing up was "efficient use of capital". But when the share price is low, nobody mentions share buybacks! Unbelievable sometimes, the lack of simple common sense. We all know the shares are currently priced at about half fair value, so buy them back for cancellation using the company's own cash - this creates value for all of us!! It's so bleedin' obvious, why aren't you doing it??!!!! Come on!! Regards, Paul.
scorpionwinger: The point on the mounties is they are flat and this is supposed to be a growth company. In addition to which I don't believe there are great barriers to entry and what we don't see in this update is whether their margins are holding up. Noted cynicism re talking the share price down but were it not for that I would wonder whether there were a couple of little warning bells about future trading. I agree the cash is healthy but here are my thoughts: a) surely they need a fair chunk of it for their working capital needs; b) I don't think the management has the depth to expand safely out of the UK; c) returning any surplus to shareholders through a special dividend hands our money to the government in taxes (which are much lower through a capital gain); d) the cash earns negligible return; e) the cash in the business is in theory priced into the share price In any event, if this is such a great prospect above 120p, where is all the buying to propel it there. I get the sense that the market has decided that the bid isn't going to happen and if it formally goes away, we'll drift around in the 90p-100p range for a very long time. In addition to which the stock is so illiquid it is virtually untradeable. Hence - I am fed up................!!
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