Ann: Preliminary Final Report, page-26

Thanks SBF.

As we all know, the silence regarding the potential acquisition of TSI is deafening (as one or 2 people may have already mentioned)! The last we heard is that we were not renewing the option / CX were not allowing us to renew the option. I am not 100% sure which although the announcement indicated we let it lapse, (as does the paragraph you quoted).
So the question is why?

One reason may be that we want to wait to put pressure on CX … they have to sell at some point fairly soon so the closer to their deadline the more pressure to sell, whatever the price. We would need to debt finance this though given the current share price.

The alternative option is that the TSI business is being circled by other potential acquirers, thus making CX unwilling to give us an option (or us unwilling to pay such an amount). This fits with the fact the “exclusivity” competent of the option ceased the first time it expired.

So if the second reason is correct (ie alternate buyers) what are the implications for TSN?

Well, we would receive a return (probably in cash) for the sale of our 25% of TSI (as we have tag along rights). Thus, if the business was sold for (say) $80m, we would get approx $20m in cash. I don’t know the exact business/tax profile of TSI but this would probably be tax free in Australia (I am not sure about the position in India). Let’s say we end up with $15m in cash though. Thus, we could pay a special dividend of (say) $10m and use the other $5m to finance new opportunities, acquisitions, etc in the digital fintech space.

How would people view this from a valuation point of view given we have a current market cap of about $20m? Any thoughts?

MartyW