Microsoft Viva, page-62

The vast majority of takeovers in Australia are via a Scheme of Arangement. This requires both of:
1) 75% of total votes to approve/be in favour of the takeover.
2) 50% of registered shareholders to vote in favour.

Karl has 10% alone and Peter had ~7.5%. All they need is either Fidelity or Webtop and to agree with them and they basically have the 25% blocking stake.

Then it comes to us individual shareholders. Most people here have flagged they wouldn’t be in favour of a takeover at 40 or 50c, and I am 100% in that group. So getting the required number of individual shareholders is going to be questionable at best. Throw in the fact that our combined weight added to Karl and Peter’s probably gets > 25% total share count voting against, even without FIL or Webtop, and it’s a non-starter.

The other form of takeover is an ‘On Market’ takeover which would require the bidder to place 902.5mn share bid at 40 or 50c in the screen. I dare say all that would accomplish is setting a new benchmark / baseline price for LVT to trade above.

If P/E is a buyer, then as you say it is because they believe they can ramp and re-list it in 2-4 years. It would also mean they clearly value the meat and bones of LVTs business as well as the space it operates in, then why would shareholders, including the likes of Fidelity, look to cut off that upside and sell their ownership a growth company early. Playing micro-caps investors are going for multi-baggers, not small returns.

And following on from all that, given that there are clear reasons not to sell unless the price was an extreme multiple - then any board member trying to turf out the CEO and founder of the business that hired them would also need to be getting a job and a briefcase of cash from the P/E firm because I can assure you that that they wouldn’t get hired to a board seat at any other co in Australia again.

So that’s a fairly long winded way of saying I don’t think LVT would be forced to the table or forced by its board to deal the company away for cheap.

This speculation is great for gaining a bit more investor focus, which in turn helps inflate what was a depressed share price. What will really cause LVTs share price to rocket is a few quarters of solid ARR growth. They have underwhelmed here and the market is discounting the companies ability to deliver this. Should it be able to do so, a re-rate would be rapid and prolonged. The tail winds are favourable and the product reorg should have resulted in a far more saleable product. It’s one that is much cheaper and far more polished that Microsoft’s Viva at this point in time for those look at that as a point of comparison. The results need to come and the excuses (from Karl) need to go over the next 6 months. If that happens, takeover speculation won’t be required to see share prices rip higher. But takeover speculation will only get louder at higher levels when you have growth companies in hot spaces going from strength to strength.