LVH was kind of a star performer during the tech boom of 2017- it rose 324% from 38c in Jan 2017 to a height of $1.23 in Dec of the same year. But 8 years later, it has only managed to generate $8 mil annual revenues with still a sizeable loss - so it may have a decent software that tech private investors can appreciate but it does not have what it takes to sell it profitably.
Now you could have been a holder in the midst of that exuberance run, almost 8 years later, the board's recommended takeover offer of 4.5c is just 12% of its price in Jan 2017, after all that long wait, you get taken out for cash at 12% of what you paid. But had you even sold it for say 64c after almost a -50% drop, you could have booked a +68% gain in just under 1.5 years.
So what's the point here. 2 Points:
1. Is it Better for Longer- i.e the longer you hold the better the price? Nope, not a certainty, most cases No. Its not a solid blue chip stock
2. Holders may have complete faith in the company and its software. But its time has run out and even with a takeover, LT holders never achieved what they hope for - and that is, if the company is given more time, may be it could turnaround and have its valuation raised. So for hodlers hoping for a takeover when everything looks down and out, be careful what you wish for. The takeover puts paid to the very reason you held - to see the stock make multiple folds.
Livehire (LVH)
Californian technology investor Accel-KKR’s attempts to hoover up another ASX-listed human resources software microcap for its Humanforce business has run up against a problem – a pugilistic hedge fund that doesn’t like the price on the table.
Street Talk understands M&A arbitrage fund Harvest Lane Asset Management has been working with boutique corporate adviser, EagleHawk Capital, to shop its 18.31 per cent stake in LiveHire to private equity players or strategics that could top Humanforce’s 4.5¢ a share bid. It is also understood to be preparing a Takeovers Panel application contesting the bidders’ characterisations of its trading in the stock.
This offer, although an 87.5 per cent premium to LiveHire’s undisturbed price from August 13, is too low in Harvest Lane’s eyes despite the company’s historical losses and auditors’ flagging its uncertainty to continue as a going concern as of June 30.
Sources said Harvest Lane’s case for Accel-KKR to bump its bid was two-pronged.
First, the talent management software business has been grinding through a strategic reset since December 2022 and, under the right management, could be a quick turnaround for a strategic buyer, similar to K1 Investment Management’s fix-up job at Elmo Software. Second, a recent contract win – buried deep in the bidders’ statement – could arguably make the company more valuable given it swells the annual recurring revenue by more than 12 per cent.
The Luke Cummings-led fund and its advisers are expected to make the case to bigger players in HR software businesses like EmploymentHero, Beeline, WorkLlama and MBO Partners. In tandem, the duo is understood to have canvassed LiveHire’s register for like-minded investors grumpy with Accel-KKR’s big-premium but still low-ball bid.
Should it succeed in recruiting other shareholders to its cause, it could present a roadblock for Accel-KKR’s Humanforce which had structured the bid as a takeover and would need to hit the 90 per cent mark to trigger a compulsory acquisition. Humanforce had accumulated a 19.9 per cent stake before lobbing its bid and has had acceptances – including from LiveHire directors’ individual shareholdings – to push it past the 28 per cent mark, but could face an uphill battle if shareholders take note of either the recent contract win – or Cummings’ behind-the-scenes campaign.
Sources said Harvest Lane was also considering lobbing a Takeovers Panel application against Accel-KKR’s Humanforce, after a supplementary bidders statement blamed the hedge fund’s buying as the sole reason why LiveHire has been trading above its bid price.
The fund’s recent campaigns include Whispir, where it was instrumental in driving up Soprano from 48¢ to 55¢. Its adversary, Accel-KKR, bought a majority stake in Humanforce for $60 million in late 2022 and was an underbidder at Elmo Software.
Humanforce, last year, dug in its heels at another ASX-listed HR software target IntelliHR where it paid a whopping 280 per cent premium to the undisturbed price after nine bids between it and rival UK’s The Access Group.
It is fair to say that, between Accel-KKR and Harvest Lane, LiveHire could turn into an interesting situation. The bidder has MA Moelis working on the deal, and did not declare its first bid as best and final. It also has matching rights, in case a rival does turn up.
