Remember, Serica was looking at full listing this year. This deal helps with the “reverse take over”.
Looking at the balance sheet, net debt and forward free cash flow, of both companies ; anything less than 70% of the combined company to us is in Enquest’s favour in my opinion. |
Worth a listen on Enquest
go to 41:15 for Enquest |
spawny100
I feel your pain, have learned a lesson and will sit here till much further down the road. |
I was in DS Smith (cardboard boxes!) recently when a similar offer came up. Many were similarly unsure how to respond. I sold at a price something like 90% of what the initial offer came in at (rather than wait for the last 10%). It ended up continuing to rise into the final settled price around twice the initial offer. The resulting company after the merger is now a major player in North American and European packaging market. BlackRock+Vanguard own around 30% of it. DYOR. |
I read it that whatever the dividend the offer will be reduced accordingly, aside from the special dividend that I read as a payment that would be made. So special dividend and maintaining of shares? No cash offer? |
I have hbr, sqz and ith in proportions 1:2:2 in terms of my N sea exposure. Just added hbr on this seemingly overdone drop. |
Yes a lower dividend for sure,probably be moving most of my SQZ holding into ITH. |
E43, yes that makes sense, but for me the only way that helps in valuing something, is to reduce its value by the debt, so a high ev as used, is a negative not positive as usually portrayed. I fear the boys want to be heads of fut100 and paid as such. We'll end up with a run if ghe mill dividend as opposed to sitting on a cash cow. The only ones who benefit are directors and corp bankers. |
Hi WaterlooO1
I think the point regarding EV is it's the price you would have to pay for an asset if you wanted to buy it on a debt free basis.ie pay 100m for a business and you then assume the 80m debt so your total cost is 180m hence the 180m EV. |
The only think that's relevant in a share for share merger is the relative market caps of each party |
Thanks bounty and oilin.
On an entirely separate note, waterloo I am in 100% agreement with you. EV just doesn't make any sense, and debt is debt.
The only people who it makes sense to is probably are the brokers and lawyers who are involved in an M&A transaction and they want to sell an the asset for more than what it is worth.
All I know is I don't want to be compensated for my SQZ shares using any EV calculations if this merger goes ahead.
And I don't want to ruffle any feathers, but don't even get me started on EBIDTA. |
Despite divis paid and production problems the SQZ share price has still outperformed ENQ albeit by a small margin since the start of the year to yesterday which doesn't say much for ENQ does it!? |
You shouldn't be looking at values at close tonight, yesterday maybe but not after news of a potential deal at an unknown price which may or may not go through has clearly skewed values. |
My figures clearly out of date, Stemis.Using real time mkt caps, but snapshot of debt and cash as at 30 June 2024.Divis paid since then and SQZ has had production problems. |
WSHAK As I mentioned earlier I was doing some research on ENQ and indeed their net debt was taken down to $386m following some repayments in 2024. |
EV is a key metric used to assess a company's worth, and is often used in acquisitions. |
If an asset comes with debt attached, you're effectively paying more to own it than if it were debt free. |
I'm getting them from Bloomie, as of 30/6/2024 so numbers may be out of date
At close tonight
SQZ, mkt cap $510m, with cash $286m and debt $242m, giving EV $466m
ENQ, mkt cap $299m, with cash 337m and debt $1009m, giving EV $971m
------------------------
According to SQZ trading update 21.1.25 as at 31.12.24 cash of $148 million and borrowings of $219 million, net debt $71m
According to ENQ ops update 12.2.25 as at 31.12.24 net debt c. $386 million |
According to the respective Enterprise Values are much closer than their respective share prices:
SQZ 660M
ENQ 653M |
I'd welcome a link that explains it. Debt in this case is probably just that. Debt
In simple terms if I own a house with a £1m mortgage and the house is worth £1.1m, the value to me isn't £1.1m but £100k. |
Debt can include lease liabilities , of course, which aren't debt as we'd normally understand it.
Also, will have have been significant cash flow movements since 30/6/2004 |
I've never understand enterprise value. Why debt adds to the value rather than is deducted is beyond my simple brain. |
I'm getting them from Bloomie, as of 30/6/2024 so numbers may be out of date
At close tonight
SQZ, mkt cap $510m, with cash $286m and debt $242m, giving EV $466m
ENQ, mkt cap $299m, with cash 337m and debt $1009m, giving EV $971m |
Where you are getting those numbers from WShak? Pre announcement
SQZ: 391m shares x 120p = £469m = $605m + net debt $71m (31.12.24) = EV $676m
ENQ: 1,885m shares x 11p = £207m = $267m + net debt $386m (31.12.24) = EV $653m |
They will want a good deal but maybe they are thinking a little further ahead...ENQ & SQZ together will be a powerhouse and potential future returns to shareholders a lot higher going forward |
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