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Still puzzled why Creightons haven't come back for a third bite at it. Unless they no longer see a way to turn things round.
with the current BAR bid price of 65p i make it now c32p, so any premium has disappeared.
Agree, that as IDP has run out of money (again) not much choice.
Regarding access to Boots and SD do they mean that they can get more BAR brands into these stores and maybe more IDP ones into supermarkets? If so that would make sense.
Incidentally was in a small SD store recently and was underwhelmed. A decent ST range but a little hidden away with Bondi and St Tropez getting the top shelves. Couldn't find any Roots or Nuthink which is a concern
I had a quick look through the scheme document. Nothing very new although I note that they calculate that between the offer and the publication of the document the total value of the consideration has dropped from 47.9p to 35.6p. Doesn't seem much other option for Innovaderma as the directors say it needs further investment.
They talk about maximising Innovaderma's access to Boots and Superdrug and BA's access to grocery chains.
Anyone else had a look?
Seems a little bitter that lemonade... ?? Plenty of value to be had in BAR and of course synergies. Nice director buy today. Onwards and upwards for IDP and BAR
But I do not own IDP anymore, sold them for 33p a share cause I don't want BAR shares.
This is the formula for NNWC:
Net-Net Working Capital Per Share (Q: Dec. 2021 )
= (Cash And Cash Equivalents + 0.75 * Accounts Receivable + 0.5 * Total Inventories - Total Liabilities
- Preferred Stock - Minority Interest) / Shares Outstanding (EOP)
= (17.284 + 0.75 * 5.08 + 0.5 * 2.655 - 15.44
- 0 - 0.181) / 17.320
= 0.39
NNWC is a much fairer view than Net assets imo.
And yes there's little upside priced into BAR. But I will wait till it drops to around this before buying as again, the recent RNS is not good. I fail to see why revenue should have dropped that much.
I did not buy IDP for it's NNWC, management looked like they could turn it around.
I don't subscribe to that site so can't see where these values are coming from but all these sites should only be used as a guide - for instance it states the enterprise value is minus £4m - which appears to be deducting the £17m cash from the current valuation. This is clearly wrong.
As i said the net assets (so liabilities have been deducted) are £22m as per H1 balance sheet for BAR but i have taken off £10m intangibles so £12m. This £12m includes the pension liability. Current valuation is £13m so no upside is factored in.
BAR shares were almost 200p this time last year so it appears the impact of bad mgmt has already been taken into account.
Incidentally IDP, which i presume you own, had net assets of £2.2m of which £400k is intangibles. So based on this each share should be valued at c7p.
Both IDP and BAR decent value at these prices IMHO. Clearly if mgmt continue to make mistakes then both could go even lower
Although I'm not saying BAR has bad management yet but they are unproven and revenue going in the wrong direction doesn't really help that.
Bar has more to drop yet before it's attractive right now given how hard it is to forecast their future results imo.
It can definitely go lower.
Bad management destroys shareholder value. See Loopup for example on that.
Also you can't just look at cash - market cap... You need to subtract all liabilities from the company.
And it's more realistic to add a big discount to the liquidation price of the intangible assets as in a fire sale these will be worth very little.
Their Net-current asset value is £0.57 a share and their Net-net working capital is £0.39 a share.
You can see here at the bottom for the ratios: https://www.gurufocus.com/stock/LSE:BAR/financials
lemon where do you get that BAR valuation from?
As per H1 accounts they have net assets of £22m of which £10m is intangibles so £12m other assets. Market value is now £12m of which almost £10m is net cash. Surely it can't go much lower
Surely Creightons will try again now? The market has spoken on this proposed BAR merger. And it's a resounding NO.
> Due to the BAR drop in price again today i think the deal is now worth 36p (29p shares plus 7p cash). BAR shares are at an all time low, but there is reason for that.
This only holds true if BAR is actually worth it's market price though. And who knows with bad management that destroy shareholder value.
If BAR becomes a net-net, i.e <= 45p a share I might think of buying a small amount simply cause it's less than it's liquidation price.
Looking at BAR and their interims from yesterday i can see this is a struggling company. Both revenues and margins are significantly down, which is a big red flag.
They have a couple of decent brands and shelf space in some decent shops - Boots, Morrisons etc, but i can't see a clear strategy - too many brands that overlap, a basic online platform etc.
They do have a big cash pile but also a large pension deficit too which offsets a large chunk.
Agree CRL would be a much better pairing for IDP.
Really struggling to see why only 1 IDP NED is moving over. Maybe CEO doesn't want to play second fiddle and possibly same with Mark Ward - he bought a lot of his IDP shares in the 70s so maybe objected to the takeover. Pure speculation.
BAR BOD clearly need some new blood.
Due to the BAR drop in price again today i think the deal is now worth 36p (29p shares plus 7p cash). BAR shares are at an all time low, but there is reason for that.
Regarding IDP i really can't understand why they spend so much on marketing during the off peak period. £1.4m spend on just over £2m gross profit is madness. Looking back this has been steadily rising over the last few years. In 2017 H1 it was £700k with similar revenues, by 2019 it had more than doubled to £1.7m on minimal revenue growth. New BOD have not significantly addressed this or effectively used their large customer database - i have bought 3 separate brands regularly over the years but i get offered the same deals as new customers, i have never been sent say a discount code for example , which would be a really cheap thing to do
I agree.
Also if you think about it why would they have not merged with Creightons last year as that would have cut costs down the same and Creightons is a FAR better business than BAR.
I think IDP has no choice due to running out of cash.
I dumped my entire stake in IDP for -25% loss, cost basis was 41p. Next time before investing in turnarounds I will wait on the sidelines to see proof it's turning around. Nice learning lesson.
I didn't want to hold BAR stock for any price. Management has not proved themselves, they have had 2 years to turn it around and yet in the latest RNS you see excuses on the huge -19% revenue drop. I'll keep track of it but on the sidelines this time until I have proof they are turning BAR around.
Also, as soon as the merger happens BAR stock will probably drop again as the people who were holding out for a higher price at the BAR stock sell their shares.
I actually think Shandy's analysis is spot on. I was actually a big fan of ID and punted a bit here. And for your sake DD check my previous posts where I was hoping this management would turn it around. I have just done my own research and it appears all is not as rosy. I would prefer this deal not get done as I am not a fan of BA but it has to get done from suffering shareholders point of view.
Yes I agree,
which is why I think shandy is right that IDP was forced to merge, especially because BAR has a ton of cash, why would they not just pay 100% in cash?
Because they either think their share price is overvalued or are opportunistic and know IDP is gonna run out of cash.
Either way BAR management does not look good imo.
Call me a cynic, but for BAR to fund this merger largely via its own shares, just before announcing a swing to interim losses looks opportunistic to say the least. Some might say just plain dodgy. They may tout around an acquisition premium versus IDP's share price on 30 March (i.e. pre- merger announcement). But they then go & report interim losses themselves, causing BAR's share price to tank over 26% at time of writing. So much of the so-called acquisition premium has evaporated before it even began.
lemonade311 - OK, so I'm not shandy, but I share your concerns. BAR's recent trading makes for grim reading with two consecutive years of losses: www.hl.co.uk/shares/shares-search-results/b/brand-architekts-group-plc-ord-5p/financial-statements-and-reports. Not sure what happened between 2017 & 2018? Presumably they divested manufacturing or something? Weird how Mark Ward is out of the picture so quickly, having built up such a large stake in IDP. Not sure this merger will go unchallenged by shareholders (or Creightons come to that).
What are your thoughts on BAR group shandy? Personally I don't like it. They seem to be going in the wrong direction after 2 years of a supposed turnaround.
My bad,
You are correct on the cash burn, seems like IDP were forced to merge.
To be honest BAR doesn't look very good either as a company. Bizarre excuses for the revenue drop in their most recent filing. Probably why the stock is dropping
Lemon - results were poor. Comparing with last year isn't a good comparison as they were a car crash this time last year.
Yes cash in H1 always declines and is made up in H2 as inventory is sold, but these figures show cash is a big issue.
As per cashflow statement - net cash used in operating activities was down £1,833k - however, borrowing of £936k came in making overall cash burn c£1m. This is a misleading figure.
Also trade payables are £1.1m more than receivables, so as of 31/12/21 IDP had to pay out an additional net £1.1m from the cash in bank (£1.3m).
So essentially it has burnt through the £4m placing money very quickly.
> All the talk is synergies but I think BAR just wants to get their hands on ST. Weird scenario where the 35p capital raise gets 7p back + upside. So short term a win/derisk but reckon they’re losing a lot of upside from the deal.
We are not better off going for growth imo. That's what the previous management had all wrong.
If you do a Discounted Cash Flow analysis on IDP you will see that the value generation comes from improving margins i n the long term as this company isn't a high growing stock so it makes no sense to try and grow rapidly over improving margins. I think management has done the right thing.
Merging with BAR improves margins.
I guess I should reiterate. Then added value I can potentially see is deploying a lot of BAR’s excess cash to launch ST & C+L …but if this was an option (& given the current covid climate I’d be advocating a softly softly approach) reckon it would be better to hit up existing shareholders to avoid the dilution. Yes a top line headcount reduction will reduce costs and spread them over more revenue but these aren’t mature businesses and we’re better off going for growth. All the talk is synergies but I think BAR just wants to get their hands on ST. Weird scenario where the 35p capital raise gets 7p back + upside. So short term a win/derisk but reckon they’re losing a lot of upside from the deal.
On the face of it I’ll be voting against. Seems like BAR are wanting a crown jewel brand at pauper pricing. Been a tough year but we should be right going forward. This just dilutes the shareholder base and provides a company that is trying to manage too many brands across too many areas.
“Surface” doesn’t like the IDP management team because they sacked him.
Can you guess who he is yet?
G’day Surface!