re: News: SAI drops CEO & reveals $1.1B takeo...
I've been buying up today. See broker comments below: From the AFR:
Pacific Equity Partners’ $1.1 billion approach on SAI Global will meet with stiff competition from rival bidders, according to Moelis & Co.
In a note to clients this morning, the investment bank claims the company is clearly for sale given the board’s decision to jettison its chief executive of six months, Stephen Porges, and engage with PEP.
The private equity firm’s indicative proposal ranges from $5.10 to $5.25 per share.
However, Moelis argues the price tag could hit $6 per share.
Analyst Ben Rundle maintains PEP has offered a “very cheap price” and points out the company’s register is wide open. “I think there is a high chance of other bidders emerging and this getting competitive. In the right hands I think it is worth $6.”
Moelis stresses that private equity is the “logical buyer of SAI” due to the opportunity to extract savings of around $30 million.
Consensus 2014 earnings for SAI sit at $106 million.
Macquarie Capital has been drafted in to advise the company while Gilbert & Tobin is providing legal counsel.
And from the Australian:
PRIVATE equity is enjoying a sweet spot right now and none sweeter than the timing of PEP?s bid for informational services group SAI Global just as it was showing its chief executive the door.
The stated reason for sacking boss Stephen Porges is said to be the pace of change, as in it wasn’t happening fast enough.
That was a big call by newly appointed executive chair Andrew Dutton, given Porges only took up the job in late January.
On May 15 PEP knocked on Dutton’s door with a $5.10 to $5.25 a share offer when the stock was trading at $4.22 a share.
The stock had traded as high as $4.44 a share earlier in the month and was trading at $5.05 in late morning trade in the wake of today’s extraordinary news.
If you want to make a bid for a company what better time than when the board is sacking the boss for not moving fast enough.
In a note this morning Goldman Sachs analyst Mike Younger put it well saying: “Today’s news is surprising on all fronts and, while we view much of the business as running on autopilot given the resilient nature of the business and solid growth drivers, it could prove disruptive at a time in which the business is seeking to address key challenges relating to the development of the new Compliance technology platform and building up of the relationship with Standards Australia ahead of contract negotiations to extend the current exclusive contract from 2018 to 2023.”
Suffice it to say all bets are off and the PEP bid is unlikely be the only offer now the company is in play.
Citi is advising PEP and Macquarie advising SAI.
SAI Price at posting:
$5.02 Sentiment: Buy Disclosure: Held
