Northgate Information Solutions Share Discussion Threads

[tsmith2] 13/12/2007 08:51

Treat the fall as a buying opp, PI banking profits from yesterday. TW has these as a BUY to 85p TP 125p, bid would be around £1

[tradx666] 13/12/2007 08:49

neguess,

I suspect that the sentiment will change later today, as it becomes known to the market who the approach is from....as it is, I'm happy I closed my shorts yesterday..

regards


T..

[qs9] 13/12/2007 08:48

£415m debt + £330m market cap.....that is a BIG EV against its forecasts profits....how could anyone offer anything other than much less than SP?

[ards] 13/12/2007 08:46

these are the toughest markets I have ever traded. the hedge funds and specs are shorting every opportunity at the minute as they know there are few buyers on the block. this stock is a good example.

[blackbear] 13/12/2007 08:45

After the event Guru has arrived.

[neguss3] 13/12/2007 08:43

This is a falling knife at the moment best left alone for a while

[typo56] 13/12/2007 08:37

Presumably because the market doesn't trust the approach will materialise at an acceptable level, and doesn't trust the assurances re the covenants.

Don't you find the timing of the approach announcement somewhat convenient? Remember, they've had approaches before which fell through.

[chrisc168] 13/12/2007 08:32

Why would this goes back down ?????

[neguss3] 13/12/2007 08:28

look s like we may drop to under 50p soon

[chrisc168] 13/12/2007 08:24

Wooow, I thought I missed the boat. Thought this would have hit 80p at least first thing. It's gone south instead. Why ?

[typo56] 13/12/2007 08:14

They were in auction for the final 20 minutes last night, which is a reasonable time for the market to decide.

My take is that they protested a little too much yesterday, and the shorters may yet be proven correct.

[blackbear] 13/12/2007 07:59

'The shares rallied to close up 12¼p at 71½p, with the market doubting a 100p-a-share valuation could be achieved.'

Funny really if they were actually there they would know the market had no time to decide 100p or not to 100p

[togglebrush] 13/12/2007 07:34

Press view from the FT

Northgate in takeover negotiations
By Philip Stafford
Published: December 13 2007 02:00 | Last updated: December 13 2007 02:00

Northgate Information Solutions, the human resources software group, is in takeover talks with a private equity group hoping to achieve a price of around 100p per share, valuing it at up to £580m.

The Hemel Hempstead-based group announced late Wednesday afternoon it was in negotiations with an unnamed suitor. It also responded to two analysts' notes, which had raised concerns that Northgate could breach its net debt covenants in the coming year.

Northgate shares had dropped by a fifth to a four-year low of 46½p on bearish notes by Morgan Stanley and Numis Securities earlier in the day. The shares rallied to close up 12¼p at 71½p, with the market doubting a 100p-a-share valuation could be achieved.

A person familiar with the situation said the private equity group had been attracted by Northgate's strong level of recurring revenues, while its high net debt meant it did not need to leverage the deal highly.

Northgate was also subject to private equity takeover approaches in October 2006. However talks, believed to have been with Blackstone and Silver Lake Partners, foundered. First-half figures on Monday showed Northgate's net debt jumped to £415m from in £184m in April following the £250m summer purchase of Belgian rival Arinso. But Numis Securities and Morgan Stanley worried further capital expenditure – based on Northgate's own predictions – could push it close to the limit of banking covenants.

Northgate's full-year net debt/ebidta covenants stand at 4.75 times until April 2008, falling to 4.25 times in July 2008.

James Dawson, an analyst at Morgan Stanley, pointed to Northgate's weak first-half cash flow, in which an inflow of £3m a year ago turned into an outflow of £11m. He said: "On our forecasts, the company will be very close to breaching the covenants of its credit facility in 2008-09."

Will Wallis, analyst at Numis, increased his full-year net debt forecast to £440m following Monday's first-half figures, suggesting Northgate's net debt/ebitda ratio in April 2008 would be 4.25 times. He told clients: "We see a pressing need for Northgate to raise cash, possibly via a disposal, although an equity issue cannot be excluded."

Northgate described the notes as "inaccurate" and said that its committed facilities amounted to £513m, providing it with around £100m of headroom for working capital and acquisitions over the remaining four and a half years of the current facility.
........................................
Deciding factor

Arinso, the root cause of the market's uncertainty over the valuation for Northgate, has proved to be the deciding factor in another private equity approach.

Northgate bought its Belgian human resources software rival over the summer for a total of £250m in cash but it raised concerns.
Some analysts worried about Northgate's heavy net debt level, others were concerned how a SAP-based system would integrate with Northgate while there were also grumblings about the price, which equated to roughly 1.6 times consensus calendar 2007 revenues. Chris Stone, chief executive, admitted he had paid "a full price" but said Northgate had been an auction.
He intended to use Arinso, which has built software for one in five of the world's largest companies, to make Northgate a global business capable of winning big deals. Interim figures showed the order book had jumped threefold year on year.

Copyright The Financial Times Limited 2007

[hotfinance14] 13/12/2007 06:56

I expect to see 80p very quickly.

[desperate dan] 12/12/2007 22:16

Many good companies are driven by huge egos, AMT included. It's the strategic direction which is crucial (and this is where I think Stone fails). Dictatorships can be very successful.

To be honest, I would be only guessing on tomorrow. Given the apparent order book at the close, likely to be gapped-up at opening, then to lose some ground after intra-day profit taking, then to recover later in the day ?!? ... would follow the form book !

Best of luck to holders.

[hotfinance14] 12/12/2007 21:29

Solid post Dan.

[desperate dan] 12/12/2007 21:24

Good post slaterlp. I think that many will wish they were in front of their screens during the course of today.

Nothing sinister in the price monitoring extension - a standard audit procedure that can take place either at random or in times of extended activity. As was already commented earlier, went into early auction and a late finish (I watched it from about 4.20 pm to appx 4.45pm).

Have to disagree however with your opinion of Stone. It is his overseas (empire building), ambitions that have :

1. Brought about a huge amount of borrowing and a level of gearing that, in current climes is perceived by some as being dangerous.
2. In the short term, ruined the balance sheet.
3. Made the square mile consider him to be an ego-driven liability.

Make no mistake, this is a good company (with a currently poor strategic direction).

Little wonder that it is a target for takeover.

Stone would be the first casualty. Expect him to resist - not necessarily in the shareholders interest - more likely his own. Which may, ironically place an extension upon negotiations, which may in turn be of benefit to shareholders.

All imho, of course.

[slaterlp] 12/12/2007 20:45

What a diference a day makes, 24 little hours. So the song goes.

A few days ago, I said that NIS was not trusted, and was undervalued. I said I hoped for a big fall. Yesterday, I got one following the results. Not being skilled enough, I couldn't understand what all the fuss was about, regarding the debt. From my inexperienced reading, it seemed that the debt was covered. But Numis trashed them.

I decided to hold, and would have bought more.

Missed my chance.

Wasn't watching the market today, and missed out big time on a fantastic chance to buy more at knock down price.

But am content with my long held shares.

Now for the offer which will have to be 90 plus. But given the chance, I will hold for long term. Nothing wrong with Stone in my view.

One thing I dont fully understand and nobody has commented on, is the Price Monitoring Extension. Is there dodgy dealing afoot?

Can somebody explain.

[thistimenextyear] 12/12/2007 19:24

hotfinance14 - what an amazing day for you as well. Bet it was a bit of a rollercoaster as you are a long term NIS shareholder so I believe. Hope it comes good for you!

[hotfinance14] 12/12/2007 18:18

What an amazing day for NIS.

[tsmith2] 12/12/2007 18:02

though dated 13/10/2006 useful reminder

Northgate Informatio Blackstone and Silver Lake weighing bids for Northgate - source




LONDON (AFX) - Blackstone Group and Silver Lake Partners are among the
private equity firms considering rival takeover offers for Northgate Information
Solutions PLC, the UK software and IT services group, according to a source
familiar with the discussions.
A deal for around 100 pence a share, valuing Northgate at around 535 mln
stg, could be announced within the next two to three weeks, the source added.
A 100 pence a share deal would be at the lower end of analyst estimates for
the Northgate deal. Some reckon a buyer could pay up to 110 pence a share for
Northgate, which makes software for human resources departments, public sector
bodies and also provides outsourcing services.
Northgate, whose software is used by 90 pct of UK local authorities, earlier
this month revealed it had received a number of unsolicited approaches and had
entered discussions over a possible sale of the company.
Blackstone and United States-based Silver Lake were among the consortium of
private equity firms that bought US software company SunGard Data Systems last
year for 11.3 bln usd (6.1 bln stg).
Another US private equity firm, General Atlantic, which was reportedly
considering a bid for Northgate and has a 13 pct stake in the company, is
unlikely to make a bid, sources said.
Another industry source said discussions about a possible bid for Northgate
were at "very early" stages, with the initial approach from private equity firms
flushing out other interested parties.
Northgate, Blackstone and General Atlantic declined to comment. Silver Lake
could not be reached for comment.
Analysts reckon Northgate's mix of long-term contracts and strong presence
in the human resources and public sector software markets will prove attractive
to private equity firms.
Over the last year Northgate shares have risen by more than 20 pct. At 11.34
am Northgate shares were up half a penny at 95-1/2, valuing the company at 512
mln stg.
In July Northgate nearly doubled its fiscal full-year profit, helped by a
booming UK public services market.
The strong performance was achieved despite the company having to relocate
its Hemel Hempstead headquarters and data centre last December, after being hit
by the Buncefield oil depot explosion.
[e-mail]
nh/rw

[dontyo] 12/12/2007 17:35

Closing market summary:

"Shares in Northgate information suddenly reversed a loss to trade over 15% higher as the I.T solutions company announced it had received an approach. Dealers mentioned Capita and Misys as two possible suitors although private equity cannot be ruled out."

[markymanc] 12/12/2007 17:28

So why is it showing 80/50?

Couldn't get any trades through on Halifax-online