Smoove Share Discussion Threads

[badday] 08/9/2023 07:08

Smoove can confirm that constructive discussions have continued between the parties and that PEXA has advised the Company that it has substantially completed due diligence.

In order to allow time for, amongst other things, the parties to progress the drafting of the relevant transaction documentation

So, what price? Perhaps now time for some weekend press speculation?

[masurenguy] 08/9/2023 07:05

Sixth extension !

Extension of deadline under Rule 2.6(c) of the Code

On 24 April 2023, the Company announced that it was in early discussions with PEXA Group Limited ("PEXA"), regarding a possible cash offer for the entire issued and to be issued share capital of the Company. Smoove can confirm that constructive discussions have continued between the parties and that PEXA has advised the Company that it has substantially completed due diligence.

In order to allow time for, amongst other things, the parties to progress the drafting of the relevant transaction documentation, in accordance with Rule 2.6(c) of the Code the Board has requested, and the Panel on Takeovers and Mergers has consented to, an extension to the deadline by which PEXA is required either to announce a firm intention to make an offer for Smoove in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. Such announcement must now be made by not later than 5.00 p.m. on 6 October 2023.

This deadline can be further extended by the Board, with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code. There can be no certainty either that an offer will be made nor as to the terms of any offer, if made. A further announcement will be made as and when appropriate.

[sidam] 07/9/2023 21:35

My guess is another extension otherwise they would have announced a bid or termination. In my experience due diligence should not take that long. We always used accountants and they normally took 4 to 6 weeks,

[masurenguy] 07/9/2023 17:29

Fifth deadline for a PEXA offer at 17.00 tomorrow. Will there be any news or just another extension !

[earwacks] 07/9/2023 10:12

These blocks of trades for 7500 shares has been going on for over a year now whatever the share price Sometimes listed as buys as well as sells. If someone is selling someone is also buying. It doesn’t appear to be a notifiable shareholder though. This is getting quite ridiculous with probability of another extension tomorrow. Never heard of a takeover bid taking this long to launch.

[masurenguy] 06/9/2023 15:30

There are just no volume sales that could indicate anything significant - so far todays trading volume is exactly on a par with the average daily volume over the past 90 days. If someone really had "insider knowledge" and was therefore acting upon it, then they would be buying or selling in very much larger volumes, subject of course to liquidity !

[sidam] 06/9/2023 14:36

Or there is no bid and they have insider knowledge. But if there were no bid, the company should announce it immediately So wait for another delay.

[masurenguy] 06/9/2023 14:22

There is no particular logic behind todays fall other than this is a very illiquid stock and it is sometimes difficult to either Buy or Sell in any quantity. This morning there was an impatient Seller looking to dispose of 45,000 shares. They had to implement that disposal through 6 tranches of 7500 shares. The first tranche was sold @46p and the sixth tranche was sold @42p. That's what took the price down. The overall trading volume today - including that sale - is 50,000 so far compared with an average daily volume of 55,000 shares over the past 3 months.

[paulsavannah] 06/9/2023 13:05

Anyone any idea to explain todays substantial drop in price? Can't see any news or RNSs anywhere?

[aimsurfer] 22/8/2023 12:44

Looks like Unicorn voted against receiving accounts and kestrel re election. Not happy with kestrel blocking takeover?

[aimsurfer] 20/8/2023 10:58

Resolution 6 - on-market share buy-backNew 10% buy back capability. Just noticed interesting statement."'The authority sought in Resolution 6 will only be exercised if the Directors consider there is likely to be a beneficial impact on key shareholder metrics and that it is in the best interest of the company at the time"Won't take much buying to see share price creep up. Share price is beneficial to my portfolio metrics.

[masurenguy] 11/8/2023 13:29

I don't really understand why PEXA as the predator would be subject to an audit from SMV who are the target where an all cash offer was concerned. We also should assume that an offer is on the table, subject to a satisfactory DD being completed, otherwise why would SMV open their books and allow an evaluation of their software and development programs to be undertaken by a potential competitor. We just don't know what any such offer might be at this point in time.

Kestrel may well desire a "decent premium for the last 5 years" but that does not mean that they are in a position to demand one. Just because they are the largest shareholder here is not necessarily the most judicious indicator where shareprices are concerned. In May last year they were (and still are) the largest shareholder in Aferian (AFRN) where they held circa 19m shares (22%) when the shareprice was circa 150p. Today, that shareprice is down 90% at 15p and AFRN raised £3.1m at 12p last month after having also secured a £3.25m loan from Kestrel a couple of months earlier. Kestrel must be sitting on a significant loss there at the moment and one of their managing partners, Max Royde, also sits of the AFRN board too. I used to have shares in AFRN but fortunately sold out at circa 140p in April 22.

SMV were originally approached by PEXA and were not seeking to sell the business. That in itself should command a decent premium if a deal is consumated, as I indicated in post #236 above, but outside the current BoD's of both companies who knows what that premium is likely to be.

[earwacks] 11/8/2023 10:47

Masranguy. I was just reading through some of the takeover panels rules and regulations as I don’t recall this sort of situation occurring before without an actual offer on the table. It was a firm of lawyers that suggested both parties would be subject to an audit. Oliver is the main Kesterel guy and has the largest single stake in the company. He was buying heavily at the 70-80p level as was I after dumping the lot at well over £1 maybe 1.05. Unfortunately I got back on when I saw Oliver was purchasing weekly for about a year. Was that just to support the price? Obviously he didn’t want to push it up too quickly by buying too much in one go, but also stock dries up quite quickly in small caps. Strange history really especially the support from institutions that are probably at around break even now. Should think they would like a decent premium for the last or 5 years. Chris Mills of Harwood is a pretty tough nut, strangely he doesn’t tAlk much about Smv. With fixed mortgages set to relax again I guess there has been no hurry for either party to do a deal other than both realising this is a ticking gold mine! So Pexa are going to have to stump up a determined offer or miss the boat completely. There again there would be the monopolies hurdle to clear too. Would possibly also be under review? Finally the other point that evaporated is who are or were the other interested parties described by Sky as queueing up at Smooves door? If an offer is on the table they are obliged to notify the market, shareholders and other interested parties. The longer this lingers the more I think Smv board will hold out for a figure well north of £1. Take it or leave it and that is what Pexa are having to justify to their board and shareholders. Could yet turn out part share part cash offer although they ruled that out at the start of negotiations.

[makinbuks] 11/8/2023 10:02

As I understand it at 70/80 Kestrel would just about break even. Does anyone know their average cost, or that of Harwood? It could be that they would accept a breakeven or small loss position to exit something that is going to face a torrid two years coming up even if its a long term winner

[masurenguy] 11/8/2023 09:50

That is a fairly logical assumption sidam. If an offer has been agreed between PEXA and Smoove, subject to the satisfactory completition of the DD process, the only question is the final price.

SMV sold CAL in November 2020 for £27.3m in cash. At that time CAL's annual sales were £8.9m with pre-tax profits of £2.4m and gross assets of £2.0m. SMV (or ULS as it was still called) had circa £2m of debt so the deal resulted in a subsequent positive cash balance of circa £25m. Since then they have returned circa £3.7m to shareholders via a tender offer and have invested in the further development of eConveyancer and also in Digital Move. That has resulted in trading losses of £8.5m in the 2 completed trading years since then as those development costs were expensed. SMV still had net cash of circa £10m at the March 2023 year end. The net cash constitutes circa 15p per share leaving a current enterprise value of circa 32p per share. The big unknown factor is how to value the development of the business model over the past 30 months.

There is no indication that SMV was seeking a buyer for the business and with the net cash on the balance sheet they were in a position to complete their development of Digital Move without requiring further funding. Therefore the approach must have come from PEXA and consequently any offer must be at a premium to the valuation that the SMV BoD must currently have placed upon the company.

We can only wait and see what that might be. At the time of the PEXA approach in April the shareprice was circa 45p, roughly where it is now. Providing that the DD is satisfactorily completed, I think that a premium valuation of the EV could be at least in the region of 75%/100% to cover the value of the DM development or circa 56p/64p, plus cash of 15p, taking us up to circa 70p/80p. Without being able to determine the value of the DM development to date, or what valuation that may have to bolt onto PEXA's existing Leeds based UK operation, that is just my own guesstimate.

PEXA have already invested over £50m in the UK, including the acquisition of Optima Legal last year and in the development of their own digital remortgaging process. Consequently, they will have to determine how easy it could be to integrate the developing SMV Digital Move and eConveyancing operation and software with their own existing model and also in the potential value in acquiring what could otherwise be a significant competitor.

[sidam] 11/8/2023 08:33

I guess the good news is that formal DD is well advanced and by deduction nothing bad has been found. Otherwise Pexa would have run away. Any proposed offer must also be acceptable to the SMV board or they would have agreed to yet another extension.

[masurenguy] 11/8/2023 08:14

What kind of scrutiny would that be earwacks? If a deal goes ahead it will be a cash transaction for all the shares so the only issue that I can see is to determine whether PEXA have the necessary funds. Can't imagine that would take very long to ascertain.

[earwacks] 11/8/2023 07:56

Pexa have to undergo the same scrutiny themselves. That maybe taking the most time

[masurenguy] 11/8/2023 07:42

Yet another extension - the 4th since the PEXA approach was originally announced on April 24th !

Extension of deadline under Rule 2.6(c) of the Code

On 24 April 2023, the Company announced that it was in early discussions with PEXA Group Limited, regarding a possible cash offer for the entire issued and to be issued share capital of the Company.

Smoove can confirm that constructive discussions have continued between the parties and that a formal due diligence process is now well advanced. In order to allow for due diligence to continue, in accordance with Rule 2.6(c) of the Code, the Board has requested, and the Panel on Takeovers and Mergers (the "Takeover Panel") has consented to, an extension to the deadline by which PEXA is required either to announce a firm intention to make an offer for Smoove in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. Such announcement must now be made by not later than 5.00 p.m. on 8 September 2023. This deadline can be further extended by the Board, with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.

There can be no certainty either that an offer will be made nor as to the terms of any offer, if made. A further announcement will be made as and when appropriate.

[masurenguy] 31/7/2023 23:30

The shareprice has slowly crept up by 17% over the past two weeks since it was announced that the negotiations with PEXA had moved on to the next level with them commencing DD on the business.
The next deadline is on Friday August 11th.

[masurenguy] 14/7/2023 15:01

"Smoove said that the current year has started strongly and transactions have remained stable albeit with lower instructions due to the state of the UK housing market and economy, and management believes that the company is trading within expectations. Smoove is seeking more strategic partnerships, similar to the one with the MAB, to expand its reach. With-Fogstrup thinks that the company will consume less cash this year, having made significant investment in the year that has just passed, and profit is in line with expectations." John Foster

[masurenguy] 14/7/2023 13:02

Ref #224 - good, informed post, AimSurfer. Makinbuks, although Kestrel are the largest shareholder there is no basis to consider them to be "clearly in the driving seat". They will certainly have input into this scenario but so will the other shareholders who collectively hold circa 72%. There must be an agreed basis for a deal otherwise why would PEXA waste more time by engaging in the DD process. Of course there is many a slip twixt the cup and lip so nobody should count the chickens before they hatch. Having expended the platitudes, all we can do is to wait and see what the final outcome is.

[earwacks] 14/7/2023 12:29

It’s speculation from all of us and annoyingly waiting in the dark. The loss of 5 million was compounded somewhat by the return of 3.7 million to shareholders. Revenue actually grew by 7 percent and conveyancing contracts grew by a staggering 44 percent from obviously a pretty low base. If Pexa are concerned about overpaying then there will be no deal. This is a fantastic disrupter business modernising the ludicrously outdated slow transaction of the housing industry. Most sales fall through at exchange thanks to the stupid amount of time a sale takes. In the eighties I had a friend completed sale and purchase within a week in the uk. The market is completely bunkers at the moment with opinions on interest rates changing faster than interest rates themselves. They have spent a lot of money investing in building and improving this business. Graham Neary at stockopedia thinks they might regret returning cash to shareholders. Thats utter nonsense IMO. 10 million is plenty. They could even make an acquisition themselves, but can’t think what else they would need unless they did reverse takeover of Pexa uk!