Well that was wrong so far! |
Have a feeling this might be ready for a bit of a run or have I just jinxed it? |
CFO change after results prepared.
Will they put up the for sale sign formally? |
Suspicious run up in the share price - when almost everything else (except those with suspected preditory attraction) are going the other way. |
Why would Brotherton walk away from his options if a sale of RCN was close by given fhe change of control statement in the annual report? Its a decent wadge of money? |
Given this morning's directorship announcement it may be relevant to note the significant % holdings positions in the company:
Kestrel Investment Partners (London) 20.61
ND Capital Investments Ltd (UK) 16.12
Lombard Odier Asset Mgt (London) 15.85
Slater Investments (London) 11.54
Harwood Capital (London) 11.04
Chelverton Asset Mgt (Bath) 3.54
Stephens Group Inc (USA) 2.02
Killik Asset Mgt (London) 1.7
Brewin Dolphin (London) 1.47
Integrated Financial Arrangements (London) 1.33
This leaves less than 15% for other holders and the top 3 hold 52.58% (as at 30 Sept) and we know that Kestrel has added since and become 20.67%.
The reduction from 15% to 7.5% qualification of the ND/Radziwil directorship in the case of future dilution is interesting. Does it imply that something is imminent or only a contingent possibility?
One suspects that corporate developments may not be far away and the parties are jostling for position. |
You are right, of course. I have edited 1109. |
It's 20.67% ? |
Price very soft (one of many atm) but Kestrel see it as an opportunity. They now own 20.67%. (Not 26.7% as written before edit.) We know from events a few months back that the company is potentially open to a deal. Kestrel are not likely to give much away and with that holding are in a fair position to resist the easy Scheme of Administration route (75% vote required). In fact, over 75% of the shares are held institutionally.
The next results, interims normally around end of November, will be interesting as the company should be entering a more stable period after the acquisitions and relocations of the past year or two. This will make analysis of real progress much easier. |
Interesting fall today following the options announcement. Especially after the largish transaction yesterday at top price.
Options could be acquired to sell quickly if a fall is expected. Alternatively they could have been acquired because the share is suspected to be at a low point in order to minimise tax on the possible gain before transferring them to an ISA to reap the tax-free benefits of a rise. So no real lead from that. |
See my post below. |
Cancelled. What happens to price tomorrow? |
An all share offer looks likely given their market cap of €482m, however their valuation is significantly higher than RCN so the premium could be material
WIIT are trading at ~12.5x LTM EV / EBITDA, RCN at close were at 9.9x LTM EV / EBITDA
If WIIT value RCN at the same rating as their equity then the upside from here would be ~25% (£1.99)
Such a deal would see RCN shareholders own 43% of the combined group on a market cap basis, 40% on an EV basis. Looks plausible
However, that's all on last twelve months data, FY25 EBITDA forecasts for RCN are for £40m, on a 12.5 EV/EBITDA multiple that would value them at £2.90, and commanding a ~48% share of the combined EV
Bottom line is that both companies are sub scale and a combination would appear to make sense, it would also substantially improve WIIT's debt / EBITDA ratio. Interesting to see what happens |
Prospective buyer has a significant encoding debt pile. Wonder how they intend funding this deal? Unless of course management are just hoping that making this announcement encourages someone else. If the bid fails I expect the price to fall further than the average of the last 12 months. |
As they get taken out, valuations of what remains should move up due scarcity. |
I am not exactly surprised. (See my musings in 1089 about the lateness of the update - Yes it was late - and the possibility that management had other affairs uppermost in their collective mind.)
We can now speculate on whether a deal can be struck and at what price. For a company on an expansion track in a high demand market this has looked too cheap (not alone in that, of course) and I have correspondingly doubled my holding in the past few weeks.
That does not make me entirely happy as it looks likely to join the rapidly growing list of promising prospects that have been grabbed from my grasp at a rather modest premium over the past 18 months. Five completed, mostly by SoA (Scheme of arrangement), with a further two (DARK and IQG) only awaiting the formalities.
I would assess that at least a dozen of my other holdings are potentially at risk so expect to lose another one, perhaps two or three, of those in coming months. |
"An index of UK small-cap stocks will cease to exist by 2028 if the current level of takeover activity persists and the initial public offering market fails to rebound, London stockbroker Peel Hunt Ltd warned. 3 Apr 2024"
2028 looks too conservative after the last two weeks. |
Oh I see, possible offer from Wiit |
Maybe someone knew it was going to get tipped today - assuming it got tipped somewhere today? |
A big jump in the offer this morning leading to a yawning gap in the nominal spread. So the mm's are not eager to unload the shares they got for 132p - I wonder why? - although I am offered a few under 135p. |
To misquote Lady Bracknell: To lose one customer, Mr. Brotherton, may be regarded as a misfortune; to lose four looks like sheer bad management. |
Downgrades to 24 and 25 via Cavendish:
24 EPS & Debt
-old = 3.6p / 37.6m
-new = 2.2p / 41.9m
25 EPS & Debt
-old = 9.3p / 25.6m
-new = 8.7p / 30.1m |
Difficult to comment on lost customers without knowing more detail. It probably implies that they were inconvenienced in some way by the site transfer - clumsy handling of the move or whatever. Given the expectation of rising demand generally it should be possible to recoup the lost volume but may demand more competitive pricing.
Otherwise the general trend is positive. |
Good overall but losing 4 larger customers = increased competition and no good reason for them to remain with RCN. Making up the lost profit on reducing cost base is less than ideal. A spoiler on an otherwise very decent year. |
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