He doesn’t know. No one knows (at least not anyone who can...

He doesn’t know. No one knows (at least not anyone who can actually comment on it).

Ultimately the regulator decides what will happen. The rate of clearances is about 90%.
The approach the commerce commission uses is listed on its website.
There is no market where this acquisition breaches the commerce commission guidelines.
It actually enhances competition, because it substantially reduces paymarks monopoly on the switching. As the recent ACCC decision on TPG/Vodafone shows, ultimately common sense should prevail- but who knows the twists and turns that can occur in the interim.

You are getting a business doing 8m EBITDA (and when stripping out growth expenses, probably closer to 12m) growing at >50%pa in the less probable scenario that the merger doesn’t go through for an EV of about 100m (EV/EBITDA of 8). If the merger goes through, you are getting a business doing at EBITDA breakeven, with incremental profit of c3m pa for an EV of 40-50m, with a long runway for growth. When markets do normalise, an appropriate PE for this sort of business is >20. Putting it another way, the business is adding about 60m in value every year that you hold it. Fully diluted that is about 30cps.

IMO the upside heavily outweighs the downside in this situation and I have continued to add to my holding. Zooming out, the management team is heavily aligned, has dealt strategically well with a number of external forces over the last few years and has really repaired its balance sheet in a non-dilutive manner under the auspices of Brad Gerdis (seriously go back and look at the New Zealand Annual reports of SPY before and after Brad took over). Also go back and see the articulation of the Australian acquiring strategy and align that with delivery- it is very impressive.

This is the stock I have been most bullish about in a long time and I am waiting to see the future unfold (actually that’s not true - I am bullish on all my core holdings!)